The whistleblower who recently reported a multi-million dollar fraud will receive nearly $50,000—the first payout from a new SEC program that rewards people for providing evidence of fraud.
The award represents 30% of the amount collected in a SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed by the whistleblower law.
Read: Blowing the whistle
“The program is already a success,” says SEC chairman Mary L. Schapiro. “High-quality tips are saving our investigators substantial time and resources.”
The award recipient provided documents and other significant information, which accelerated the pace of the investigation. The whistleblower’s assistance also led to a court ordering more than $1 million in sanctions, of which approximately $150,000 has been collected thus far.
The court is considering whether to issue a final judgment against other defendants in the matter. Any increase in the sanctions ordered and collected will increase payments to the whistleblower.
“This person provided the exact kind of information and cooperation we were hoping the program would attract,” said Robert Khuzami, director of the SEC’s Division of Enforcement.
Read: When to blow the whistle
SEC didn’t approve a claim from a second individual seeking an award in this matter, since the information provided didn’t lead to or significantly contribute to the SEC’s enforcement action.
Awards for participants can range from 10%-to-30% of the money collected. The Dodd-Frank Act included enhanced anti-retaliation employment protections for whistleblowers and provisions to protect their identity.
SEC cannot disclose any information—including information the whistleblower provided to the SEC—that could reasonably be expected to directly or indirectly reveal a whistleblower’s identity.
About eight tips a day are flowing into the SEC. “We made the first payment after just one year of operation, so we are open for business and ready to pay people who bring us timely information,” says Sean McKessy, chief of the SEC’s Whistleblower Office.