The Securities and Exchange Commission will soon pay out $452 million to whistleblowers across the country, according to a New York Post article, “SEC set to hand out up to $452M to whistleblowers.” The SEC’s whistleblower program recently marked its first anniversary. Whistleblowers can collect from 10 percent to 30 percent of what the government recovers when a tip has helped the government obtain the recovery.
So far, tips have exposed all manner of corporate wrongdoing, ranging from insider trading and rigged bonds deals to cover-ups of cooked books and bribes. SEC officials are eager to pay out and publicize the first whistleblower award, as they anticipate the news will result in a flurry of new tips.
A case against Wachovia Bank is illustrative of how the program works. Last December the bank paid a penalty of $25 million to settle a probe into rigging municipal bond sales. If a whistleblower’s tip helped the SEC bring the case, it could be worth up to 30 percent of the SEC’s take to the whistleblower ? or $7.5 million.
Other large whistleblower awards could flow from the following SEC recoveries, among others:
- $92.8 million in penalties from convicted hedge fund boss Raj Rajaratnam,
- $59.6 million from Hungarian telecom Magyar Telekon to settle charges of bribing officials,
- 22 million from RBC Capital Markers to settle a probe into rigging muni bond deals, and
- $32.5 million from JP Morgan Securities to end a probe into irregularities in bond sales.
SEC investigators received nine tips per day on average during the first two months the program was launched. Residents of California filed 34 tips (more than any other state), while residents of New York filed 24 tips. At those rates, the SEC would have received 2,200 tips during its first year.
Atlanta attorney J. Boyd Page of Page Perry noted “the whistleblower program is a very important part of the SEC’s strategy to protect the integrity of financial markets. It encourages people to do the right thing by reporting fraud, and also may deter some fraudulent activity. Page Perry is experienced in handling whistleblower matters. We expect this area of our practice expand rapidly.”
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.