Corporate scandals in the financial markets are not a new thing and some of them relate to insider trading. It was necessary for the cycle of such scandals to be broken especially after the market crisis of 2008. Before, it was the duty of the law enforcement to ensure that the cases of insider trading were reduced in the US. However, when their number continued to increase, it became necessary to introduce another enforcement body to do the work. Therefore, the Congress developed the SEC Whistleblower Program to perform this duty.
SEC Whistleblower lawyer group and the program was created to encourage the public to speak out on the illegal act of insider trading. It offers the whistleblower robust employment protections that prevent the employer from firing them or taking disciplinary action for providing insider trading information to the SEC. Further, it provides monetary rewards to those that provide the information. It is also possible for one to provide the information anonymously in case they want to protect their identity.
The introduction of this program has motivated the public not to keep quiet when they witness such matters. The SEC Whistleblower Program receives approximately 20,000 tips as well as complaints every year. From this number, only a fraction of them are investigated because they select the most promising tips. At any one time, the U.S. Security Exchange Commission has about 2000 cases under investigation and one can even take up to four years to be completed. Only a few of these cases lead to an enforcement action where the people involved pay sanctions more than $1 million. This is the threshold required for the whistleblower to get the reward.
Individual and groups can participate regardless of their citizenship. SEC Whistleblower Program has empowered employees in investment firms to speak out on misconduct. In a study that was carried out by the University of Notre in 2015, it revealed that 89% of the employees are more likely to report wrongdoing because of the protections and the reward the SEC Whistleblower Program is providing. The problem is that not many people know about this program.
SEC Whistleblower Program has paid up to $162 million in rewards to whistleblowers since it was introduced. 10-30% of the amount that the culprits pay at the close of the case is what is paid as the reward to the individual who gave the information that led to the prosecution of the persons or the company involved.