Wall Street Whistleblowers May Be Eligible to Collect 10 – 30% of Money that the Government Recovers
Under the Dodd-Frank Wall Street reform law, Wall Street insiders who become whistleblowers may be eligible to receive 10 – 30% of the money that the government gets back. According to National Whistleblowers Center executive director Stephen Kohn, the prospect of collecting millions could provide potential tipsters with the incentive to act, while saving investors billions.
Under the new law, whistleblowers that provide the Commodity Futures Trading Commission or the Securities and Exchange Commission with “original information” will be allowed to stay anonymous. A securities attorney will then act as an intermediary between the whistleblower and the government. This helps maintain the tipster’s anonymity while allowing the securities fraud allegations to be made.
Already, the SEC has been taking more aggressive measures to award whistleblowers. Just last week, the SEC awarded $1 million to Karen and Glen Kaiser—the largest amount that the SEC has paid for insider information (this was administered under an earlier authority)—after they gave the agency key documents and information for its insider trading case against Pequot Capital.
Karen used to be married to former Microsoft employee David Zilkha. According to the SEC, in 2001, Zilkha tipped Pequot about an upcoming earnings report form his then-employer. Pequot Capital Management Chief Executive Arthur Samberg is accused of trading on the insider information and illegally making $14.8 million. Samberg eventually agreed to settle the SEC’s insider trading allegations against him for $28 million.
Under the Dodd-Frank provisions, whistleblowers that provide key information regarding securities fraud, insider trading, and commodities fraud cases are likely to get a lot more than $1 million.
Related Web Resources:
Connecticut couple gets $1 million SEC award for Pequot, Reuters, July 23, 2010
New Wave of Whistleblowers Could Become Millionaires, CNBC, July 26, 2010
SEC Charges Pequot Capital Management and CEO Arthur Samberg With Insider Trading, SEC, May 27, 2010
Dodd-Frank Wall Street reform law, Open Congress'
Commodity Futures Trading Commission
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