The U.S. Securities and Exchange Commission (SEC) announced an additional US $150,000 payment to the first-ever SEC whistleblower. The whistleblower has now been awarded a total of nearly US $200,000 since the award was announced inAugust 2012. This whistleblower helped the SEC stop a multi-million dollar fraud by providing documents and other significant information. The SEC stated at the time that the award was based on the US $150,000 the SEC had collected thus far.
The SEC whistleblower award programme was created three years ago by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC is authorised by the US Congress to issue financial awards to individuals who come forward with high-quality information that leads to an SEC enforcement action in which over USD 1 million in sanctions is ordered. Before the programme started, the SEC could only reward individuals who provided information on insider trading.
Whistleblowers with information about financial fraud can receive up to 30% of what the government recovers as a result of the disclosure. In addition, part of the Whistleblowing Program is the prohibition of retaliation by employers against employees who provide the SEC with information about possible securities violations. Having a strong internal reporting system in place may encourage individuals to use internal reporting instruments prior to reporting to the SEC.
Jeffrey Newman represents whistleblowers.