With the massive amount of capital flowing in and out of the industry, the securities market is the subject to illegal and unethical conduct on regular terms. Most of the work being done is not in concrete form and even the most tangible of evidences is the securities being held in the form of securities power or securities certificate marked with a signature guarantee. The absence of “hard cash” in the market makes it extremely vulnerable to fraud and corruption. To overlook and keep the activities within the industry monitored, the Securities and Exchange Commission has issued rules and regulations for each and every investor as well as financial institutions to follow with aim to aid with the efficient flow of assets and securities.
However, regardless of the measures taken, there are still some occasional hiccups in the otherwise liquid flow in the market across the globe. While the major role in keeping these mishaps under control is from SECs side, some are still left unchecked. SEC developed a program to employ the common people to keep the flow of securities in the global market in check through the use of perhaps the most efficient firearm in the law enforcement stash of weapons of the SEC, using the non-stop assistance and veiled information about a probable security breach. The common people providing these services came to be kept under the tag, the whistleblowers.
A whistleblower, as the name suggests, is a person who informs the competent authorities of actions, which are deemed incorrect and prohibited within the norms of a public or private organization, being performed. These actions can be as simple as the violation of company rules or as humongous as them posing a threat to national security, but as far as the information was not obtained by the security personnel but fed to them by another individual, this act will be considered as whistleblowing. These people have the liberty to either reveal this information externally by providing the information to a third party, such as the government or law enforcement agencies or voice them internally to other people within the organization, such as the immediate supervisor.
Regardless of the choice of alternatives they take to surface this information, whistleblowers always undertake the risk of retaliation of any sort from those who were suspected or blamed of misconduct. Although there are laws made and enforced that protect whistleblowers against foresaid retaliation from concerned parties and though there are third party organizations whose sole purpose of existence is to protect these valuable informants, protection can only go so far, and the ground reality is that they still face actions being taken against them in the forms of criminal charges, social dishonor and termination from jobs etc.
The SEC broadcasted the release of almost $4 million to an overseas whistleblower, since the information the individual provided led the SEC to conduct an open investigation and the unwavering support that was provided by that particular individual resulted in a successful law enforcement act. In a statement by a representative from the SEC’s Office of the Whistleblower, it was clarified that regardless of the residence of a whistleblower, the contributions they make are unparalleled and that the award represents the thorough help provided by the particular whistleblower through the case. Since the establishment of this department and funds allocation, the SEC has given away $326 million to numerous whistleblowers that have aided them to collect a total of $1.7 billion in the form of monetary sanctions. However, none of these awards have been given away using the funds of affected investors, but from the Investor Protection Fund sanctioned by the Congress.
In the case of the SEC, whistleblowers are of supreme importance since using their knowledge of the occurring events and the individuals involved, they can aid the SEC to identify misconducts and violations beforehand, enabling them to take actions against the offenders and to reduce the harm afflicted on the investors. Hence, directly or indirectly, whistleblowers help the Commission take swift actions against the individuals involved in a misconduct, hence safeguarding the integrity of the US capital market. Their contributions being held with the utmost respect and value by the SEC and the US government resonates in the fact that the Congress has sanctioned the SEC to offer financial rewards for whistleblowers that came forth with information valuable to the SEC and which resulted in law enforcement action against the offenders. Not only does this award range from 10%-30% of the money collected from the enforcement action when the amount sanctioned exceeds $1 million, but in addition to safeguard these individuals, SEC has a very strong policy of not revealing any information about them to the world. In a public message, the SEC encourages other individuals to take part in their whistleblower program effectively.