In an interview with AdviserOne, Securities and Exchange Commission chairman Mary Schapiro spoke about the agency’s new Whistleblower Office. The office was created per a Dodd-Frank mandate that entitles individuals who voluntarily give the Commission original information leading to an SEC enforcement action and other related actions a reward.
Schapiro says that the SEC is in the process of “finalizing” its whistleblower rules. She also noted that the agency’s newly acquired whistleblower authority is increasing the quantity of quality tips it is receiving, which should allow for better enforcement. The SEC receives thousands of tips annually.
Schapiro says that under a new Tips, Complaints, and Referral System, tips can all be placed in one database that will allow the information to be shared throughout the agency. She said that the previous inability to share information was a factor in the Madoff Ponzi scam that bilked investors of billions.
Prior to Dodd-Frank, the SEC could only award whistleblowers in insider trading cases. There was, however, a cap of 10% of the penaliteis collected in the action.
To be considered for an award, a whistleblower will have to provide information that results in successful enforcement action or an administrative one that leads to monetary sanctions of over $1 million. The whistleblower could receive 10-30% of the total sanctions collected. The amount awarded will depend on the type of help the whistleblower provided and the significance of the information given.
Also, the information from the whistleblower needs to either have led to a new investigation or examination, or if the alleged misconduct was already under investigation, then the whistleblower needs to have provided information that couldn’t have been obtained otherwise and was key to the action’s success.
Our securities fraud law firm represents victims of investment fraud and other financial scams.
Related Web Resources:
SEC's Mary Schapiro Talks About Whistleblower Office, 12b-1: Exclusive Interview, AdvisorOne, April 26, 2011
Potential whistleblowers have little to lose and millions to gain with the SEC's reward system, RiaBiz, April 14, 2011
More Blog Posts:
Ex-UBS Employee Can Proceed with Her Whistleblower Claim, Says District Court, Institutional Investor Securities Blog, February 15, 2011
Why Whistleblowers Should Act Quickly and Consult Competent Legal Counsel, Stockbroker Fraud Blog, December 18, 2010
Whistleblower Sues Moody’s Investors Service for Defamation, Stockbroker Fraud Blog, September 15, 2010