Fraud

February 1, 2013

Roughly 3,000 tips on alleged wrongdoing were passed on to the SEC in the first full fiscal year of a new whistleblower program.

Tips came from all 50 states and 49 countries, according to an annual report on the program for the fiscal year that ended in September. The program was created to comply with a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, P.L. 111-203.

Allegations about corporate disclosures and financials, which represented 18.2% of submissions to the SEC, were the most common category of complaints from whistleblowers, followed closely by offering fraud (15.5%) and manipulation (15.2%).

A total of 3,001 tips were filed, and 143 enforcement judgments and orders were issued during the fiscal year that may be eligible for whistleblower awards. The Dodd-Frank Act allows the SEC to pay financial awards to whistleblowers who provide information that leads to a successful SEC enforcement action with more than $1 million in sanctions.

The SEC’s first award under the whistleblower program totaled nearly $50,000 and was given Aug. 21 to an informant whose identity remains anonymous. The whistleblower is expected to receive more if additional judgments in the case lead to more funds being collected in sanctions. Whistleblowers can receive between 10% and 30% of the sanctions collected, and awards are paid from the Investor Protection Fund established by Congress.

The annual report is available at tinyurl.com/cu8mzjg.
 

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