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The Almighty Buck Government United States

SEC Issues Largest Ever Whistleblower Award of $279 Million (reuters.com) 47

Posted by BeauHD from the financial-incentives dept.
The U.S. Securities and Exchange Commission (SEC) has given its largest ever award of almost $279 million to a whistleblower whose information was crucial in an enforcement action by the regulator. The SEC did not reveal the case involved, but the award shows there is a significant incentive for whistleblowers to come forward with accurate information about potential securities law violations. Reuters reports: The award is more than double the $114 million that it had issued in October 2020. "As this award shows, there is a significant incentive for whistleblowers to come forward with accurate information about potential securities law violations," said Gurbir Grewal, director of the SEC's Division of Enforcement, in a statement. "The whistleblower's sustained assistance including multiple interviews and written submissions was critical to the success of these actions," said Creola Kelly, chief of the SEC's Office of the Whistleblower.

Payments to whistleblowers are made out of an investor protection fund that was established by Congress and financed entirely through monetary sanctions paid to the SEC by securities law violators. Awards to whistleblowers can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.
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SEC Issues Largest Ever Whistleblower Award of $279 Million More

SEC Issues Largest Ever Whistleblower Award of $279 Million

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  • The fact that the whistleblower gets a huge award from the government and then has to pay a huge chunk of it in taxes to the very same government makes your brain hurt.

    • Re:And the government gets how much? (Score:5, Informative)

      by quonset ( 4839537 ) on Monday May 08, 2023 @05:54PM (#63507661)

      The IRS rule is you pay federal taxes on income derived from any source. Therefore, you would pay 39.6% on the payment. However, you can deduct attorneys fees from this amount and, as a rule, attorneys generally take up to 40% of the award. Also, there is a possibility of you paying state income tax on the award as well.

      A bit more information [marketrealist.com].

  • Sure award them, hell go into the millions, But why such an obscene amount? how many other people could have been helped or budget holes plugged while still making that whistle blower rich for life.

    • Re:FUCK WHY? (Score:5, Informative)

      by Ocker3 ( 1232550 ) on Monday May 08, 2023 @06:26PM (#63507717)
      To pursuade other people with similar knowledge of incredibly huge illegal activities to do the same thing. They would likely be able to make large amounts of money illegally, now there's a way to make a lot of money legally and bring something huge down. Society benefits from this, because the incredibly huge thing gets taken down.
      • and you think a $10m or $20m, hell even a $50m reward would not encourage them?

        • Re:FUCK WHY? (Score:5, Insightful)

          by iAmWaySmarterThanYou ( 10095012 ) on Monday May 08, 2023 @07:13PM (#63507765)

          Not necessarily, no. Why would it?

          Whistleblower will never work again and in some cases is literally risking their life.

          They're getting a percentage of money that would be zero without their help.

          Why can't you let the little guy win for once?

        • The idea is an amount that entices them to give up the (likely very lucrative for them) scam. I don't dispute its an obscene amount of money and indicates the level of fraud that was at play. To me, robust regulation that deters this behavior - youll note the same arguments are made of capital punishment, I'll leave why that particular punishment is not an effective deterrent (look what just happened in Texas - that person feared living more than dying) as an exercise to the reader.
          • I have no problem with them getting rich from it and a percentage. I just think there should be a hard cap on it. maybe that extra percentage goes to charities or something. But dumping a quarter billion on one person is just not healthy use of that money.

            • Re: (Score:3)

              by Nugoo ( 1794744 )
              I don't think there should be a cap on whistleblower payouts unless there's a cap on corporate profits and a cap on personal income. Good behaviour should be incentivized at least as much as bad behaviour.
    • So you are effectively pro-corruption.

      Have you ever complained about the obscene compensation that the CEO class gets? Have you ever wondered about all the bullshit fees that mysteriously appear on bills? Have you even seen "shipping and handling" fees that are 30% of the cost of the item?

      Corrupt practices, both legal and illegal, are so prevalent in our economy that it should make everyone furious. Meanwhile you whine about a truly minuscule amount of money compared to the multi-billions dollars worth o

    • Re:FUCK WHY? (Score:5, Insightful)

      by tlhIngan ( 30335 ) <slashdot&worf,net> on Monday May 08, 2023 @07:37PM (#63507793)

      Sure award them, hell go into the millions, But why such an obscene amount? how many other people could have been helped or budget holes plugged while still making that whistle blower rich for life.

      The award amount is generally 10% of the money collected from the fine.

      It's done that way because honestly, the whistleblower might otherwise participate in the scheme - let's say you cap it at $10M, and given how large it is here, that whistleblower might know if they kept quiet for two years, they'd make $50M. That won't encourage people to come forward.

      Also, whistleblowers generally suffer huge pushback - they are effectively unemployable in their field of employment and other employers generally won't employ them, so it helps to set them for life because they're not going to be able to work ever again. Or they're going to have to make huge sacrifices like having to move out of the country.

      And hey, if it encourages people to report frequently and report often all the better

      • Re: (Score:1, Insightful)

        by christoban ( 3028573 )

        Again, how does $50 million bucks not "set them for life??"

        Also, if waiting a few years makes their award even bigger, that's strong incentive NOT to come forward for much longer.

    • Re:FUCK WHY? (Score:4, Informative)

      by phantomfive ( 622387 ) on Monday May 08, 2023 @08:55PM (#63507877) Journal

      Sure award them, hell go into the millions, But why such an obscene amount?

      The law is written in such a way that the whistleblower gets a small percentage of the penalty amount the company pays. In other words, some company here just paid a massive fine to the SEC.

    • > while still making that whistle blower rich for life

      Who's rich and doesn't spend a lot of their money?

  • It was CETA Energy (Score:3, Informative)

    by Lukachu ( 10383235 ) on Monday May 08, 2023 @06:00PM (#63507673)
    It was a carbon capture tax credit Ponzi scheme: https://www.sec.gov/litigation... [sec.gov]

    • It needs to be something for which the SEC took in Billions in fines.

      • Re: (Score:2)

        by malx ( 7723 )

        If they're authorised to pay out 10-30% of proceeds, and they paid out $279m then we're looking at a minimum fine of $930m. A $155m ponzi scheme doesn't cut it.
        I doubt they'd pay out before the fine was collected and absolutely beyond possibility of reduction on appeal.

        What's more, surely the SEC can't toss that many billion dollar fines around. So it shouldn't be too hard to narrow down the potential cases. Chances are those even peripherally involved will know who the whistleblower must be, making the an

  • Now try blowing the whistle on war crimes (Score:4, Informative)

    by ffkom ( 3519199 ) on Monday May 08, 2023 @06:20PM (#63507707)
    It's telling how snitching on some finance fraudsters gains you millions, while reporting on war crimes gains you jail time.

    • Re: (Score:3, Insightful)

      by migos ( 10321981 )
      Well if you steal 1.5M documents, most of which are not about domestic surveillance, then fled to Putin, jail time is definitely in order. If he only stole and leaked the domestic surveillance program to journalist, then he might have actually gotten a pardon.

      • Exactly. Snowden literally gave away (among a lot more info), the identities of most of the overseas people working with the U.S. in Iraq and everywhere else in the world. He surely got a lot of people murdered, claiming he "didn't have time" to filter the release, absurd considering it was months. Then he just happens to go straight to Moscow, where he immediately meets and marries a trophy wife.

        Snowden was recruited by the Putin regime. Get over it.

        • Re: (Score:2)

          by _merlin ( 160982 )

          He got his girlfriend moved to Russia and then married her. He didn't marry a "trophy wife" he'd just met after moving to Russia. Give evidence of one person killed due to details leaked by Snowden. Come on, just one.

      • > then fled to Putin

        Are you a CIA propagandist or have you just not had time in the past decade to look into this for five minutes?

        I'm assuming you're not just dumb and fall for obvious hoaxes.

    • How is it telling? The only reason the reward is millions is because the amount defrauded was millions. Would it also be telling if the total fraud had only been $100 with a reward of $10? No one planned for this case or this payout; they just setup some flexible machinery.

  • ... if the whistle blower was one of these Wall Street types who gets 25 million dollar bonuses every year for doing not much.

  • ... for exposing rampant insider trading by congress-critters?

    oh. nevermind. fuck.

  • But be very clear that they're only allowed to target frauds that might cost or embarrass even richer people. The objectively biggest frauds in American history, all of which have taken place in this century, were politically off-limits to them.
  • So, suck someone else into heading up your securities scam, collect the profits, then rat them out for even more profits. Nice. It's like the criminals themselves wrote these laws and regulations... wait, ... they did.
  • After tax and administrative costs this person got $8
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