NEW YORK (MainStreet) The scam is not identified and the tipster remains anonymous, but information leading to the crackdown on a massive financial fraud has led to a record $14 million reward. The Securities and Exchange says a tip led to the recovery of "substantial investor funds" -- enough so to warrant the largest reward ever paid by the SEC's whistleblower program.
The fraud information program was established in 2011 as authorized by the Dodd-Frank Act. The whistleblower program pays for "high-quality original information" that results in an SEC enforcement action with sanctions exceeding $1 million. Rewards can range from 10% to 30% of the money collected in a case.
"Our whistleblower program already has had a big impact on our investigations by providing us with high quality, meaningful tips," said SEC Chair Mary Jo White. "We hope an award like this encourages more individuals with information to come forward."
Less than six months after receiving the whistleblower's tip, the SEC was able to snag the perpetrators and recover investor funds. The Commission says the anonymous whistleblower provided original information and assistance that allowed the SEC to investigate and enforce the matter more quickly than otherwise would have been possible.
"While it is certainly gratifying to make this significant award payout, the even better news for investors is that whistleblowers are coming forward to assist us in stopping potential fraud in its tracks so that no future investors are harmed," said Sean McKessy, chief of the SEC's Office of the Whistleblower. "That ultimately is what the whistleblower program is all about."
The SEC's first payment to a whistleblower was made in August 2012 in the amount of approximately $50,000. In August and September 2013, more than $25,000 was awarded to three whistleblowers that helped the SEC and the U.S. Department of Justice halt a sham hedge fund, and the ultimate total payout in that case once all sanctions are collected is likely to exceed $125,000.