Thursday, October 3, 2013

SEC Awards More Than $14 Million to Whistleblower

By Tim Dulaney, PhD, FRM

Earlier this week, the Securities and Exchange Commission (SEC) announced that an anonymous whistleblower has been awarded over $14 million for the information provided to the SEC that resulted in an expedited enforcement action.  This is the third, and by far the largest, award granted by the SEC's Office of the Whistleblower since it was established by the Dodd-Frank Act in 2011.1

Although the announcement does not specifically mention which enforcement action lead to the award, we can narrow the field of possibilities a bit.  Since the range for awards is between 10% and 30% "of the money collected in a case", we can estimate that the SEC has collected between $46.7 million ($14 million/30%) and $140 million ($14 million/10%).   According to the Whistleblower Award Proceeding (PDF), even more money is likely to be collected resulting in an even larger award.

By raising the bar with such a large award, the SEC is hoping to encourage more whistleblowers with high-quality information about unlawful conduct to come forward and help facilitate commission enforcement actions.  If you have information about unlawful conduct and would like to come forward with a tip, you can submit your tip here.  For more information about the whistleblower program generally, see the 2011 annual report (PDF) and the 2012 annual report (PDF).
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1The first award occurred in August 2012 and amounted to about $50,000 and the second award occurred recently with a total payout "likely to exceed $125,000."

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