Federal securities regulators said Tuesday that they had handed out its first reward under a new whistle-blower program, paying nearly $50,000 to a person who helped the agency shut down an investment fraud.
An unnamed recipient provided documents and other data to the Securities and Exchange Commission in the case. The commission said that the information helped it prevent new victims from being ensnared in a fraud scheme.
Under a new law, the S.E.C. cannot disclose any additional information about the firm involved, including what information the whistle-blower provided to the commission. But the S.E.C. did say that the case led to more than $1 million in sanctions, of which $150,000 has so far been collected.
The whistle-blower reward program was authorized by the Dodd-Frank financial overhaul. The $50,000 award represents roughly 30 percent of the amount collected, the maximum payout under the new program. If the court increases the sanction, and more money is collected, the payout is expected to increase, the S.E.C. said.
“This whistle-blower provided the exact kind of information and cooperation we were hoping the whistle-blower program would attract,†said Robert Khuzami, the S.E.C.'s head of enforcement. “Had this whistle-blower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.â€
Apparently, the S.E.C. distinguishes between high-quality tips and those that are less helpful. According to the release, a second individual who sought an award in this case was denied any compensation because the tip didn't advance the case.
The program, which is a year old, is bringing in eight tips a day, the S.E.C. said.
“The fact that we made the first payment after just one year of operation shows that we are open for business and ready to pay people who bring us good, timely information,†said Sean McKessy, head of the S.E .C. whistle-blower program.
