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Over the past several yeas, the Securities and Exchange Commission’s whistleblower awards program has been championed by lawyers and politicians for offering powerful incentives to tipsters to come to the regulator with evidence of wrongdoing.
A new study, however, finds that almost a quarter of the SEC’s whistleblower awards have gone to law firms with attorneys who have close connections to the regulator, potentially deterring other whistleblowers from coming forward.
A decade after a forensic accountant raised red flags about Bernard Madoff’s multibillion-dollar Ponzi scheme to regulators who didn’t listen, an entire industry is surfacing tips from company insiders and expert analysts who scrutinize corporate filings and submit them to the SEC for monetary rewards.
The SEC said it has awarded more than $1.3 billion to 281 individuals through the whistleblower program since 2011. The program, established by the 2010 Dodd-Frank Act, gives whistleblowers between 10% to 30% of amounts generated through monetary penalties if their tips result in successful enforcement action and fines exceed more than $1 million.
Even though the SEC whistleblower award program has been applauded for its success in detecting and investigating potential wrongdoings, the private, unregulated industry of whistleblower attorneys may be distorting the program’s goal to encourage more whistleblowing, a recent research paper...
Authorities say the fuel shipment in question belonged to a private trading firm, not the state or national oil company, as investigators seize devices and warn of strict action against misinformat...