Wednesday, August 22, 2012

SEC Issues First Whistleblower Award

The SEC announced yesterday that a whistleblower who helped the it  stop a multi-million dollar fraud will receive nearly $50,000 — the first payout from a new SEC program to reward people who provide evidence of securities fraud.

The award represents 30 percent of the amount collected in an SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed by the whistleblower law.

“The whistleblower program is already becoming a success,” said SEC Chairman Mary L. Schapiro, who advocated for the program. “We’re seeing high-quality tips that are saving our investigators substantial time and resources.”

The award recipient, who does not wish to be identified, provided documents and other significant information that allowed the SEC’s investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims. The whistleblower’s assistance led to a court ordering more than $1 million in sanctions, of which approximately $150,000 has been collected thus far. The court is considering whether to issue a final judgment against other defendants in the matter. Any increase in the sanctions ordered and collected will increase payments to the whistleblower.

“This whistleblower provided the exact kind of information and cooperation we were hoping the whistleblower program would attract,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Had this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.”

If you believe you have a whistleblower claim, or are looking for additional information regarding the SEC's program, contact our office at whistleblower@beamlaw.com

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