Big Payouts Are There For Relevant Whistleblower Tips
Since the U.S. Securities and Exchange Commission's (SEC) whistleblower program was given new teeth under the Dodd-Frank Act and became effective on August 12, 2011, the number of whistleblower tips that have come in have been quite remarkable. The November 2011 release by the SEC reveals that there have been roughly 7 tips per day and a total of 334 tips received since the new law became effective. If this holds true, the number of tips received in a year of operation will be 2,438.
One reason for the number of tipsters is the potential for considerable amounts of money as payouts to whistleblowers that provide relevant information that is not already known or available to the SEC, which results in the agency receiving over $1 million in penalties in connection with the case reported. The payouts range from 10% to 30% of any amounts recovered by the SEC of $1 million or more. That boils down to a minimum of $100,000 to a whistleblower if their information meets all of the qualifications. According to the report, the top categories of information from tipsters have alleged market manipulation (16.2%), corporate disclosures and financial statements (15.3%) and offering fraud (15.6%).
The SEC received whistleblower tips from 37 states, in addition to several from foreign countries. The largest number of tips from the United States came from California (34), New York (24), Florida (19) and Texas (18). The most from outside the U.S. have been from China (10) and the United Kingdom (9), according to the SEC report.
To date, there have been no payouts from the SEC's whistleblower payout fund of $452 million. Under the SEC system, whistleblowers have 90 days to file their claims for payouts after the agency posts resolved cases on its whistleblower office website. In the future, the SEC plans to provide notice to those individuals who have made relevant contributions leading to the successful prosecution of cases resulting in fines equal to or greater than $1 million.