SEC sees increase in whistleblowers fraud tip-offs

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According to the Wall Street Journal, as the Financial Reforms Act whistleblowers reward program has become active, the U.S. Securities and Exchange Commission (SEC) has seen an increase in tip-offs concerning alleged corporate fraud.   

Under the Dodd-Frank Financial Reforms Act, whistleblowers who provide “original information” about large frauds or misconduct could net as much as 30 percent of the penalties and recovered funds collected by the SEC.     

More specifically, anyone who provides a tip that leads to a successful SEC action will be able to collect between 10% and 30% of the amount recovered — as long as the total amount exceeds $1 million.   This means the minimum payout is $100,000.    The whistleblower could be a company insider or a private investor, if they’re able to offer information or analysis that leads to an action. And with potential payoffs netting millions — or even tens of millions — of dollars, experts are bracing for a surge in tip-offs.

The whistleblower program aims to get timely information from insiders close to a fraud and based on which the agency would pursue cases against the offenders.   This incentive gives the SEC access to some very high-quality information.

Anna Timone (195 Posts)

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