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Financial Fraud Law

Whistleblowers Received $14.8 Million from the SEC in 2013

 Whistleblowers received $14,831,965 64 in payments from the Securities and Exchange Commission during fiscal year 2013.

The SEC’s whistleblower program, now in its third year of operation, was designed to incentivize individuals to provide the SEC with specific, credible, and timely information about possible securities law violations, and thereby enhance the SEC’s ability to act swiftly to protect investors from harm and bring financial fraudsters to justice. Under the program, individuals who voluntarily provide the SEC with original information that leads to a successful enforcement action resulting in monetary sanctions of over $1,000,000 may be eligible to receive an award equal to 10 to 30 percent of the monies collected by the Commission or in a related action.

The number of whistleblower tips and complaints the Commission receives annually increased from 3,001 in the 2012 fiscal year to 3,238 in the 2013 fiscal year. From the establishment of the whistleblower program in August 2011 until the end of fiscal year 2013, the Commission has received 6,573 tips and complaints from whistleblowers.

The SEC allows individuals who prefer to remain anonymous to be eligible under the whistleblower program if they submit their whistleblower tip through an attorney.

Although they must disclose their identity to the SEC before they can be paid an award, the SEC does not publicly disclose whistleblower identities when it announces awards.

The Dodd-Frank Act extended anti-retaliation protections to SEC whistleblowers, which the SEC can enforce through civil enforcement actions in federal court or administrative proceedings. Furthermore, the SEC’s rules prohibit any person from taking action to impede an individual from reporting a securities law violation to the SEC, including through the use of a confidentiality agreement.

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