Last week the SEC awarded someone a record-smashing $279mn for blowing the whistle on some nefarious activity that “led to the successful enforcement of SEC and related actions”. But who, and for what?
That’s what Alphaville has been pondering over the weekend. That may sound beyond tragic, but from some of the texts we’ve been receiving on the subject we seem to be in good company. Well, curious company at least.
Some background: The Dodd-Frank Act (section 922, finreg nerds) established the SEC’s whistleblower programme to encourage insiders to anonymously report dodgy dealings. To do so, the SEC can reward whistleblowers whose information leads to monetary penalties with 10-30 per cent of the sum they (and other regulators) extract.
So the fines in this case must be at least $930mn, and could be as much as $2.8bn. And yet no one seems to know even what kind of dastardly malfeasance this whistleblower blew the whistle on!
To put that in context, in the SEC’s 2022 fiscal year (up to the end of September) the regulator extracted a total of $6.4bn from 760 enforcement actions. The award is more than twice the size of the previous record, the $114mn the SEC handed out for in October 2020. That itself was double the then-record $50mn awarded to someone in June 2020.
The whistleblower walked away with almost three times what Apple’s Tim Cook made in 2022 (which triggered a shareholder outcry). It’s enough to buy an entire 110 acre lush private island in Thailand, and still...
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