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Posts Tagged ‘securities whistleblower award’

SEC Whistleblower Program Issues First Award

Friday, September 7th, 2012

With the August 21, 2012 announcement of the first award payment resulting from the whistleblower program created under Dodd-Frank, the Securities and Exchange Commission finally put weeks of speculation to rest.  Although, at $50,000, the award was small in comparison to those made under the False Claims Act, the award actually amounts to 30% of the total amount the government has collected, thus far, as a result of the informant’s information—the maximum allowed under the statute.  The importance of this first payment is not to be understated given that the SEC program is still in its infancy.  Indeed, the fact that the maximum percentage was awarded suggests the value placed on the information brought to the SEC by the informant, and reaffirms the effectiveness of the program.  While the informant has elected to remain anonymous, the SEC did state that it denied an award payment to a second informant in the case stating that the information provided did not significantly advance the investigation.

The full extent of the impact that this announcement will have on the SEC Whistleblower Program has yet to be seen, however it is undeniable that it should serve to encourage more individuals with valuable information to step forward.  Indeed, in the SEC’s press release, the Director of the SEC’s Division of Enforcement, Robert Khuzami, confirmed the value of both the informant and the information he brought forth stating “This whistleblower provided the exact kind of information and cooperation we were hoping the whistleblower program would attract. 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.”

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SEC Delays Whistleblower Rules

Thursday, April 28th, 2011

SEC wants to "get it right."

The SEC has postponed adoption of rules for its whistleblower program. According to the Dodd-Frank Act, final regulations for the whistleblower program were to be adopted by the SEC no later than April 21, 2011. Earlier this week, the SEC announced on its website that it is planning to adopt new rules some time between May and end of July. SEC spokesperson John Nester did not provide any specifics about the delay, commenting only that the SEC was crafting all the new rules for Dodd-Frank with an emphasis on “getting it right.”

The financial industry needs an effective fast-track incentive program for whistleblowers. The Dodd-Frank program augments the SEC’s 40 year old insider trading reward program that never realized its potential as a decentralized fraud enforcement mechanism. The SEC, under the old insider trading program, only paid out awards to whistleblowers four times. SEC watchers generally discount the insider trading program and are skeptical about the SEC’s interest in working with whistleblowers in general.

The new Dodd-Frank whistleblower program has generated considerable interest among would be whistleblowers and large companies. Frustrated employees and fraud fighters are delighted to have another program that incentivizes whistleblowers; large companies criticize the program because it encourages whistleblowers to report fraud directly to the government, bypassing internal corporate compliance procedures.

Whistleblowers could file SEC claims for rewards under the Dodd-Frank Act as of last July but will be expected to comply with the new rules once the new rules are adopted. Kenney & McCafferty, P.C. is happy to assist you in assessing your potential SEC whistleblower claim. Call K&M for a free consultation today

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