If there is one thing to be learned from a heist movie, it is that no one likes a rat. However, the Securities and Exchange Commission (SEC) might beg to differ. Three years ago, the SEC started a whistleblower program in the hopes of rewarding so called rats for any information that might lead to the uncovering of potential fraud cases.
The program has already proven to be valuable, having led to the uncovering of several cases of fraud over the past few years, and continues to show its efficacy today. The SEC announced on Friday that it gave a $3 million payout to an informant that they claimed provided substantial information that has helped the SEC to uncover a particularly dastardly case of fraud. While the SEC has not released any details related to the nature of the fraud case, they have stated that the payout is the third highest given out as a part of their whistleblower program.
According to Andrew Ceresney, the director of the SEC’s Division of Enforcement, the whistleblower program helps by, “providing significant financial incentives for people to come forward.” The SEC further states that the whistleblowers, “specific and detailed information comprehensively laid out the fraudulent scheme which otherwise would have been very difficult for investigators to detect.”
The initial information provided by the whistleblower did more than just expose the scheme. It apparently led to related actions that uncovered further debauchery, leading to an increase in the whistleblower’s reward.
Paid out by a special fund set aside by Congress, the SEC rewards anywhere from 10% to 30% of the money collected in the case depending on how impactful the information might be. As of this case, the SEC has awarded 17 whistleblowers for their help and has paid out over $50 million. Considering the funds saved and the criminals put to rest, the program has more than paid for itself and will hopefully lead to the discovery of potential fraud cases in the future.