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Securities Litigation

SEC Awards First Dodd-Frank Whistleblower Payment

By  Jean M. Flannery
October 2012
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In August, the SEC made its first payout to a whistleblower under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The sum was small—$50,000, or 30 percent of the amount collected so far. 30 percent is the maximum allowable under the whistleblower program, and 10 percent is the minimum. Future awards could far exceed $50,000; Dodd-Frank entitles whistleblowers to between 10 and 30 percent of collected sanctions for securities laws violations over $1 million.

According to a press release by the SEC, the whistleblower turned over documents that helped prevent a multi-million dollar fraud. The release is silent on the whistleblower’s identity or nature of the claim. The release does say, however, that the SEC has collected about $150,000 of the ordered $1 million in sanctions. The court may issue judgments against other defendants in the case that would increase the whistleblower payment. 

The SEC set up the whistleblower program under Dodd-Frank about a year before it made the first payout. Since then, according to the chief of the SEC’s Whistleblower Office, “about eight tips a day are flowing into the SEC.”

Full October 2012 Quarterly Securities Enforcement Briefing

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