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SEC approves $50,000 payout under new whistleblower program
August 21, 2012 / 5:32 PM / 5 years ago

SEC approves $50,000 payout under new whistleblower program

* Whistleblower’s documents, information helped stop a fraud-SEC

* New program required by Dodd-Frank, finalized in 2011

Aug 21 (Reuters) - U.S. securities regulators have approved a nearly $50,000 reward for a whistleblower who turned over documents and other information to help stop a multi-million dollar fraud, the first award in a new program to encourage people to tell regulators about securities fraud.

The whistleblower, who was not identified, provided information that helped speed an investigation and resulted in a court imposing more than $1 million in sanctions, the U.S. Securities and Exchange Commission said on Tuesday.

“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,” said Robert Khuzami, director of the SEC’s enforcement division.

The tipster will receive 30 percent of the about $150,000 collected so far, out of more than $1 million in sanctions imposed, the maximum award percentage allowed under new whistleblower rules required by the 2010 Dodd-Frank financial oversight law and finalized by the SEC last year.

The SEC did not disclose the exact amount of the sanctions or other details of the fraud to avoid identifying the case.

A second person who offered information in the case was not rewarded because the tip did not significantly help the enforcement case, the SEC said.

Before Dodd-Frank, the SEC could only reward people who provided information on insider-trading cases. The 2010 law allows regulators to reward people whose information leads to an SEC enforcement action with more than $1 million in sanctions.

Many companies, including Google Inc and JPMorgan Chase & Co, had complained that the expanded whistleblower incentives could undermine internal compliance programs because they do not require people to first report problems to the company.

The program does offer people who report wrongdoing to the company as well as the SEC better chances of receiving a higher percentage reward.

The regulator has received about eight tips per day since the program started in August 2011, the SEC said.

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