SEC Pays $50,000 in First Dodd-Frank Whistleblower Reward
The U.S. Securities and Exchange Commission awarded $50,000 to a whistleblower in its first payout from a program started last year to reward people who provide regulators with evidence of securities fraud.
The whistleblower helped the SEC bring an enforcement action that resulted in more than $1 million in sanctions, the agency said today in a statement. The award represents 30 percent -- the maximum allowed under the Dodd-Frank Act -- of the approximately $150,000 collected so far.
The agency set up a whistleblower program in August 2011 to reward individuals who provide evidence of securities law violations which results in sanctions of more than $1 million. The program was authorized in the 2010 financial-regulation overhaul, which said awards could range from 10 percent to 30 percent of the money collected.
“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,” SEC Enforcement Director Robert Khuzami said in a statement.
The SEC, which didn’t name the whistleblower or identify the related enforcement action, said it rejected a claim from a second person in the same matter because the information the person provided didn’t lead to or significantly contribute to the enforcement action.
Bradley Bondi, a former SEC attorney who is now a partner at law firm Cadwalader, Wickersham & Taft LLP in Washington, said in an interview that even though the award is “relatively small” in this case, it’s notable that the SEC awarded the maximum amount it could under the whistleblower rules.
“The question is whether the SEC will continue to award bounties at the upper end of the range when the SEC has whistleblowers in bigger cases,” he said.
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