Since Congress created a strong whistleblower program at the Securities and Exchange Commission under the Dodd-Frank Act in July of 2010, tips have been pouring into the SEC in record numbers, according to an article in yesterday’s LA Times. In the new program’s first year of operations, the SEC received around 2,870 tips, or approximately eight per day, which contrasts sharply with the dozen every six months allotted by the previous program.
The tips are not only coming in a much higher volume, but also are of higher quality and are coming from a wide variety of sources. The array of whistleblowers who have submitted information to the new program ranges from board members and former spouses to senior executives and sources from within financial firms and more.
Whistleblower rewards are an important factor. Whistleblower attorney, Erika Kelton, a senior partner at Phillips & Cohen LLP, told the LA Times, “They feel they need some financial security in their future. Many of these people risk never being able to work again in their chosen career.”
To ameliorate some of the financial and professional risks implicit in blowing the whistle, the SEC’s new program offers whistleblowers a reward of 10 percent to 30 percent of the total amount recovered by the SEC, if more than $1 million is recovered. The SEC awarded on Tuesday its first whistleblower reward under the Dodd-Frank program for $50,000.