First SEC Whistleblower Receives Payout
The Securities and Exchange Commission (“SEC”) announced that it has paid out the first whistleblower award under the new whistleblower award program created in 2010. The SEC’s whistleblower program was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act to reward individuals who come forward and report possible violations of the federal securities laws to the SEC.
Under the program, eligible whistleblowers are entitled to an award of between 10% and 30% of the money collected in enforcement actions brought by the SEC or other regulators. The whistleblower program also prohibits retaliation by employers against employees who provide the SEC with information about possible securities violations.
According to the SEC’s Office of the Whistleblower, the unidentified whistleblower helped stop a multi-million dollar fraud and has received $50,000 as a reward. The SEC said that the whistleblower could receive additional payouts if additional penalties are collected in the case.
The dollar amount is far less than what government fraud whistleblowers in cases filed under the qui tam provisions of the False Claims Act typically receive. However, the reward represents 30% of the total penalties collected to date by the SEC in that case, the maximum percentage allowable by law.