Securities and Exchange Commission Issues First Whistleblower Award under New Program


The Securities and Exchange Commission announced last week that it issued its first whistleblower award under a new program designed to reward people who inform the SEC of securities fraud.  The award of nearly $50,000 represents 30 percent of the amount collected by the SEC against the scheme’s perpetrators.   A court ordered more than $1 million in sanctions against the perpetrators and the SEC has been able to collect approximately $150,000 thus far.  The unidentified whistleblower provided documents and information that enabled the SEC’s enforcement division to move quickly and prevent additional victims from investing in the scheme.

The new program, authorized by the 2010 Dodd-Frank Act, was established in August 2011 and receives about eight tips per day according to the SEC.   In order to collect an award a whistleblower must provide information that leads to or significantly contributes to an enforcement action by the SEC in which more than $1 million in sanctions is ordered.  Awards can range from 10 to 30 percent of the money collected.  Under the program the SEC cannot disclose any information which could directly or indirectly reveal a whistleblower’s identity.