SEC Makes Sizable Whistleblower Award to Former Company Officer

March 30, 2015 — To help fight corruption and fraud in the securities market, the U.S. Congress initiated a whistleblower program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program authorizes awards for informants who alert the Securities and Exchange Commission (SEC) to credible, specific and timely information concerning an imminent or ongoing fraudulent scheme. Company insiders, such as officers and directors, frequently are privy to such information. Whistleblowers could receive from ten to thirty percent of the amount the government recovers, provided the amount exceeds $1 million.

Former Company Officer Who Reported Securities Fraud to SEC Receives Whistleblower Award of $475,000-$575,000

The SEC recently announced that it has paid a whistleblower award amounting to somewhere between $475,000 and $575,000. The sizable award reportedly was made to the former officer of a company engaged in securities fraud.
To be eligible for an award in an SEC fraud action, company officers and directors who discover a fraud that is revealed by another employee must disclose the information to the SEC after the company’s compliance personnel neglect to address the issue adequately. The recently announced award is the first made to a former company officer under these circumstances.
Fifteen whistleblowers have received awards since the SEC program was instituted over three years ago. The nearly $50 million in payouts have come from an investor protection fund that Congress established as part of the program. The fund’s resources are derived from monetary sanctions imposed by the SEC on securities law violators — not from monies that would otherwise go to injured investors.

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 comparable claims against your employer or anyone else engaged in securities fraud, contact us or call our qui tam attorneys at 800.226.9880 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 George Tankard and Anne Izzo in our Maryland office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.

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