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Award Payment to SEC's First-Ever Whistleblower Quadruples

Bruce Carton | April 7, 2014

In August 2012, the SEC broke new ground when it issued its first-ever whistleblower award under Dodd-Frank. The $50,000 award came pursuant to a provision in Dodd-Frank that authorized the SEC's whistleblower program to reward individuals who provided it with high-quality original information that led to an SEC enforcement action in which more than $1 million in sanctions was ordered. The SEC stated at the time that the award was based on the $150,000 the SEC had collected thus far and "any increase in the sanctions ordered and collected will increase payments to the whistleblower." On Friday, the SEC still-unidentified first whistleblower had his or her initial $50,000 award quadrupled when the SEC announced that this whistleblower will now receive an additional $150,000 payout after the SEC collected additional funds in the case.

The SEC announced that it had collected an additional $500,000 from one of the defendants in the case. Sean McKessy, chief of the SEC's Whistleblower Office, stated that the latest payment “shows that the SEC's aggressive collection efforts pay dividends not only for harmed investors but also for whistleblowers. As we collect additional funds from securities law violators, we can increase the payouts to whistleblowers.”

And there still may be even more money on the way to this whistleblower. The SEC added that it expects to collect additional money from defendants in the underlying case as some are making payments under a periodic payment schedule ordered by the court.