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More than $30 million awarded to securities fraud whistleblower

Under the Dodd-Frank Act, whistleblowers can receive sizable awards for notifying the Securities and Exchange Commission (S.E.C.) of securities fraud. The first payout -- close to $50,000 -- was made in 2012, and the whistleblower program continues to be effective. The S.E.C. is authorized to award between 10 and 30 percent of a sum collected by the government as a result of information provided by a whistleblower.

In September, the S.E.C. announced the biggest payout yet under the Dodd-Frank whistleblower program. Between $30 million and $35 million will be awarded to an individual who notified the S.E.C. of an "ongoing fraud." In accordance with the whistleblower statute, the informant, who lives outside of the United States, was not identified, and the S.E.C. did not offer any specifics regarding the enforcement action. 

According to an order issued by the S.E.C., the whistleblower might have received an even larger payout if he had reported to regulators sooner. According to the commission, the whistleblower's delay meant that "investors continued to suffer significant monetary injury that otherwise might have been avoided."

However, an attorney representing the whistleblower took issue with that characterization, saying that her client's actions were "totally reasonable." The tipster reported to regulators several months after the whistleblower protection program was enacted.

In one of our previous posts, we discussed a separate case in which a federal appeals court denied whistleblower protections to a tipster in China.

For more on whistleblower and qui tam claims, please visit our Whistleblower Litigation overview.

Source: The New York Times, "S.E.C. Makes Largest Ever Whistle-Blower Award," Matthew Goldstein, Sept. 22, 2014

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