WASHINGTON, DC – The Securities and Exchange Commission’s announcement of its first whistleblower reward under the Dodd-Frank program is notable for the speed with which the whistleblower case was investigated and resolved and also for the relative size of the reward, said attorneys with the whistleblower law firm Phillips & Cohen LLP.
“It has only been two years since Congress created the SEC whistleblower program and a little over one year since the SEC set up its Whistleblower Office,” said Erika A. Kelton, a Washington, DC, attorney with Phillips & Cohen. “The SEC acted amazingly fast to have made an award already, given that it had to evaluate the whistleblower information, investigate the case and win a court order to recover funds.”
“The SEC’s quick response and thorough action shows how committed the SEC is to working with whistleblowers who have detailed and credible information,” Kelton said. “The SEC clearly recognizes that whistleblowers provide significant help to its enforcement mission.”
“The SEC awarded the whistleblower 30 percent of the government’s recovery, which is the maximum share allowed under the law. By awarding the maximum amount, the SEC is sending a message that it values whistleblowers.”
The reward in this case is based on the amount the SEC has recovered so far, which was only $150,000 out of more than $1 million in court-ordered sanctions. The SEC also indicated that fines may be assessed against other defendants. If additional funds are ordered or recovered, then the whistleblower’s reward will increase.
Whistleblowers who provide the SEC with information that results in an SEC recovery of more than $1 million will be rewarded with 10 percent to 30 of the recovery, under the Dodd-Frank Act.
The SEC’s announcement noted that the whistleblower did not wish to be identified, which is typical of most SEC whistleblowers as they are reluctant or unwilling to risk their careers on the uncertain outcome of their cases, attorney Kelton said.
“To whistleblowers, one of the attractive aspects of the SEC’s program is that they can remain anonymous,” Kelton said. “The promise of anonymity plus the potentially sizeable rewards are key factors in decisions by high-level professionals to provide the SEC with valuable information about wrongdoing.”
The SEC announcement will give the whistleblower program a boost.
“The news that the SEC has made its first reward is certain to convince additional whistleblowers to step forward.”