The Securities and Exchange Commission reduced a whistleblower award to $1.5 million Friday because the whistleblower was “culpable” and delayed reporting the misconduct for a year.
The whistleblower provided “vital information and ongoing assistance that proved important to the overall success of an enforcement action.”
But the SEC said in Friday’s award order (pdf) the whistleblower delayed his or her report “and benefited financially during the delay.”
The reduced award underscored “the need for individuals to come forward without delay,” according to Jane Norberg, chief of the SEC’s Office of the Whistleblower.
The SEC said the whistleblower was “culpable” and only reported after learning of the SEC’s ongoing investigation.
During the delay “investors were being harmed,” the SEC said.
The SEC didn’t say how much the whisltleblower award could have been.
Earlier this month the agency awarded $39 million to one whistleblower and $15 million to another in the same case.
In March this year, two whistleblowers from Merrill Lynch shared a $50 million award from the SEC. In the same case another Merrill Lynch employee was awarded $33 million, according to their lawyer.
The SEC’s whistleblower program has now awarded $322 million to 58 individuals since the first award in 2012.
Awards are paid out of penalties the SEC collects from securities law violators.
Whistleblowers can be eligible for an award when they voluntarily provide the SEC with “original, timely, and credible information” that leads to a successful enforcement action.
Awards can range from 10 percent to 30 percent of the money collected when penalties are more than $1 million.
By law, the SEC protects the confidentiality of whistleblowers and doesn’t disclose information that might reveal a whistleblower’s identity.
Richard L. Cassin is the publisher and editor of the FCPA Blog.