by Brian Mahany
One year after the SEC finalized the rules to its new whistleblower program, the Commission’s Claims Review Staff announced its first whistleblower award. An unnamed person received $50,000 for providing information that resulted in a million dollar fine. Some commentators were disappointed with the first award – awards under the false claims act can sometimes be measured in the tens of millions of dollars – but we believe the first award is quite generous.
SEC staff awarded 30% of the money collected thus far. The fine imposed, however, was $1 million meaning the whistleblower should receive more money as the fine is collected. Under the law, the SEC can award up to 30% of any money it collects, meaning the award in this case is the maximum allowed by law.
According to a press release from the SEC, the award was given for information that stopped a multi-million dollar fraud. A second claimant received no money according to the government because their information was not helpful.
Congress authorized awards as part of the 2010 Dodd – Frank Act. Individuals who provide “high-quality” information can receive 10 to 30% of the money collected by the government. There is a catch, however. The fine imposed must be at least $1 million.
The Dodd Frank law also has strong anti-retaliation protections to protect those who come forward with information.
It will be interesting to see the quality of the leads generated by the program and how often future awards are made. The SEC says its whistleblower tip line receives about 8 calls per day.
The SEC program joins the whistleblower laws found in the original False Claims Act and in the IRS whistleblower program. All 3 programs give claimants a percentage of what the government collects based on the claimant’s information. Of course, to collect an award you must generally be the original source of the information. In other words, you can not file a claim based on a rumor you heard or based on information gleaned from the newspaper.
Time will tell whether the SEC program will be successful but it is off to a good start. The whsistleblower was allowed to remain anonymous (an important tool in protecting workers from retaliation), a multi-million dollar fraud was prevented and a maximum percentage award was made by the Commission staff.
If you believe you have information about unpaid taxes, people ripping off taxpayers or securities fraud, contact a good whistleblower lawyer. The attorneys at Mahany & Ertl have helped many people step forward and stop theft and abuse. Whistleblowers earn every penny of what they receive. Thankfully, more and more people are stepping forward and fighting corruption and greed by participating in these programs.
If you think you may have valuable information, contact attorney Anthony Dietz at or contact the author Brian Mahany directly at (414) 704-6731. All inquiries are kept in strict confidence and protected by the attorney – client privilege. We will give you an honest assessment of your potential claim and let you what to expect about the process.
Mahany & Ertl – America’s Fraud Lawyers, Proudly Representing Whistleblowers All Across America. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many jurisdictions.