The first whistleblower award in the amount of $50,000 was paid by the U.S. Securities and Exchange Commission to a person who helped shut down an investment fraud. The SEC action resulted in more than $1 million in sanctions, of which $150,000 has so far been collected. Furthermore, the award could increase if more money is collected by the SEC.
The significance of the first whistleblower payment is “the clear message that there’s more to come,” Sue Reisinger of Corporate Counsel was quoted as saying (“SEC Hands Out First Whistleblower Payment, Hints at More to Come”). “The fact that we made the first payment after just one year of operation shows that we are open for business and ready to pay people who bring us good, timely information,” Sean McKessy, head of the SEC’s Whistleblower Office, was quoted as saying.
The SEC whistleblower program received nearly 3,000 tips in its first year of operation and is currently producing about eight tips a day, according to the SEC.
Much of the information the SEC is receiving consists of high-quality information from “corporate insiders who are aggressively giving them information about corporate problems.”
It has been reported in the New York Post that the SEC is set to pay $452 million to whistleblowers across the country. Whistleblowers can collect from 10 percent to 30 percent of what the government recovers when a tip has helped the government obtain the recovery.
The first whistleblower’s award could increase to $300,000 or more as the SEC recovers more money from the wrongdoers, according to the Corporate Counsel article. The whistleblower, who was not named, delivered documents and other data to the SEC that helped prevent people from becoming victims.
“This whistle-blower provided the exact kind of information and cooperation we were hoping the whistle-blower program would attract,” Robert S. Khuzami, chief of SEC enforcement, was quoted as saying, adding: “Had this whistle-blower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.” (“S.E.C. Pays Out First Whistleblower Reward,” by Peter Lattman, New York Times).
Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.