Though the IRS has found itself under fire due to its slow moving and slow paying whistleblower program, the SEC has managed to construct a relatively efficient program. As evidence of the program's success, SEC announced earlier this month that it made the largest award of its history.
At the beginning of October the Securities and Exchange Commission announced that it had awarded more than $14 million to one whistleblower due to information that led to a substantial recovery.
The program, which was created in 2011 by the Dodd-Frank Act, works by rewarding whistleblowers who provide valuable information that lead to SEC enforcement actions with sanctions greater than $1 million. The whistleblowers whose information is responsible for the charges can expect to receive an award ranging from 10 percent to 30 percent of the money that is ultimately collected by SEC authorities.
In the recent case, the whistleblower, who chose not to be identified, provided information that led to an SEC enforcement action that would otherwise not have been possible. The SEC revealed that within six months of receiving the tip from the whistleblower the SEC was able to bring an action against the perpetrators of the fraud and secure the return of investor money.
The first payment made under the SEC's whistleblower program occurred back in August 2012 and amounted to $50,000. This year the pace of awards has picked up, with three $25,000 awards being paid in August and September of 2013. To date, the SEC says that the largest payout as part of the whistleblower program was for $125,000, meaning the $14 million award represents a major step forward. Giving the typical award ranges, this means that the case could have involved fines of up to $140 million.
The program has proved to be an incredible success, with tips leading to a significant number of high quality information that have uncovered fraudulent acts responsible for harming investors across the country. The hope is that news of these record-setting awards encourages other individuals to come forward with their own information.
Sources:
SEC Awards More Than $14 Million to Whistleblower published at SEC.gov, October 1, 2013
Whistleblower Awarded $14 million - SEC's Largest Ever by Gregory Wallace, published at Money.CNN.com, October 1, 2013
See Our Related Blog Posts:
SEC Whistleblower Program Up And Running But Paying Out Little
Impact of Sequestration on IRS Whistleblower Program
