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SEC Shells Out $50,000 in First Dodd-Frank Whistleblower Case

Posted by attorney Jeffrey Stewart

Under its new Dodd-Frank whistleblower program, the U.S. Securities and Exchange Commission has issued its first payout of $50,000. The program rewards people who provide the SEC with evidence of securities fraud.

The case, in which the SEC did not identify the whistleblower or the investigation that triggered the action, but did add that the information the SEC received resulted in more than $1 million in sanctions. The $50,000 payout signals 30 percent (the maximum allowed under the Dodd-Frank) of the $150,000 the agency collected thus far.

In August 2011, the SEC initiated a whistleblower program that rewards individuals who provide evidence of securities law violations, which result in the agency leveling sanctions in excess of $1 million. The awards can range from 10 to 30 percent and were authorized in the 2010 financial-regulation overhaul.

Robert Khuzami, director of the division of enforcement at the U.S. Securities Exchange Commission (SEC), issued this statement, “Had this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized."

It should also be noted that the SEC, in its first whistleblower case, awarded the maximum allowable amount of 30 percent under Dodd-Frank guidelines.

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Filed under: Fraud