SEC Issues First Whistleblower Program Award (Press Release)

The SEC announced that a whistleblower who helped the SEC stop a multi-million dollar fraud will receive nearly $50,000 - the first payout from a new SEC program to reward people who provide evidence of securities fraud. The award represents 30 percent of the amount collected in an SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed by the whistleblower law.

The Dodd-Frank Act authorized the whistleblower program to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered. Also included are provisions designed to enhance anti-retaliation employment protections for whistleblowers and provisions to protect their identity. The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower's identity.

Sean McKessy, Chief of the SEC's Whistleblower Office, said that, since the program was established in August 2011, about eight tips a day have been flowing into the SEC.

Cross Reference(s): Exchange Act Section 21F; Exchange Act Rules 21F-1 through 21F-17; Dodd-FrankSection 922; Lofchie Guide to Broker-Dealer Regulation: Supervision Chapter; Internal Investigations Chapter. (The Internal Investigations Chapter in particular contains a good discussion of the Whistleblower requirements of Dodd-Frank as of the date of the Chapter.)

View press release in full here (links externally to SEC website).Additional Materials: Order: Release No. 34-67698; Order: Release No. 34-67699; www.sec.gov/whistleblower.