October 27, 2014 — To help fight corruption and fraud in the securities market, Congress established a whistleblower program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program provides for awards to informants who alert the Securities and Exchange Commission (SEC) to key information concerning an imminent or ongoing fraudulent scheme. Insiders who work in a company’s internal audit or compliance department may be the most likely to uncover such information. As a reward to those willing to notify the government, whistleblowers could receive from ten to thirty percent of the government’s recovery provided it tops $1 million. These awards are paid from an investor protection fund financed by monetary sanctions that violators pay to the SEC. The award fund receives no financing from taxpayers or from monies recovered on behalf of harmed investors.
Tipster Who Alerted SEC To Well-Hidden Fraud Scheme Receives Largest Amount Ever Awarded To SEC Whistleblower
A whistleblower who provided the SEC with information that was central to a successful enforcement action will receive an award in excess of $30 million. This is the largest amount awarded in an SEC fraud action to date. The whistleblower lives abroad.
The tipster approached the SEC with information about a massive fraud scheme that was ongoing at the time and would likely have gone undetected. In awarding the informant this record-breaking amount, the SEC confirmed its commitment to working with whistleblowers to redress U.S. securities law violations.
The recent $30 million award is more than double the sizable $14 million award made to an SEC whistleblower in October 2013. In its fiscal year 2013, the SEC made awards to four whistleblowers. In fiscal year 2014, that number has increased to nine.
Whistleblowers Notify SEC of Violations
While Waters & Kraus was not working with the whistleblower on this SEC matter, we are representing tipsters in similar instances of SEC fraud. If you have SEC fraud claims against your employer or anyone else engaged in securities fraud, contact us or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can work together to notify the government about SEC fraud and abuse. Our qui tam lawyers, like Michael Armitage and Gary Paul in the firm’s California office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.