The Securities and Exchange Commission (SEC) yesterday issued the first payment under the whistleblower program it established in August 2011.

According to an SEC press release, the agency awarded $50,000 to an unnamed whistleblower for tipping it onto a multimillion-dollar securities fraud scheme. The agency says the whistleblower's tipoff allowed it to launch a speedy investigation and led to a court ordering more than $1 million in sanctions.

“This whistleblower provided the exact kind of information and cooperation we were hoping the whistleblower program would attract,” said Robert Khuzami, director of the SEC's Division of Enforcement. “Had this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.”

The award is equivalent to 30 percent of the sum the SEC has so far collected from the unnamed fraudsters—the maximum percentage payout allowed under the whistleblower program. The SEC says the court is considering whether to issue a final judgment against other defendants in the matter, and any increase in sanctions would increase payments to the whistleblower.

“The payout of this first award, albeit a modest sum, encourages future bounty hunters because it shows that the money is there for quality information,” Ed Ellis, co-chair of Littler Mendelson's Whistleblowing & Retaliation Practice, told InsideCounsel in an email. “We are likely to see additional and larger bounties issued in the near term as the SEC has hundreds of whistleblower cases with settlements in excess of $1 million in the pipeline. The big question for business is whether modern compliance systems are able to detect and remedy misconduct before it goes to the government.”

The whistleblower program stems from the Dodd-Frank Act. It authorizes the SEC to reward individuals who offer high-quality, original information that leads to an enforcement action that leads to more than $1 million in sanctions. Whistleblowers can receive between 10 percent and 30 percent of the sanctions the agency collects. Since the whistleblower program began last year, the SEC has been receiving about eight tips a day.

Read Reuters and the Wall Street Journal for more information about the SEC's first-ever whistleblower award.

For more whistleblower stories from InsideCounsel, read:

Judge rules that Dodd-Frank does not protect foreign whistleblowers

Rolls-Royce faces whistleblower suit

Regulatory: Most SEC whistleblowers tell company first

5 steps to protect against whistleblowers

Whistleblower collects on Citigroup bad loan settlement

Mutual fund workers denied whistleblower coverage

FCA whistleblowers earned a record $532 million in 2011

Does SOX protect whistleblowers who steal confidential information?

The Securities and Exchange Commission (SEC) yesterday issued the first payment under the whistleblower program it established in August 2011.

According to an SEC press release, the agency awarded $50,000 to an unnamed whistleblower for tipping it onto a multimillion-dollar securities fraud scheme. The agency says the whistleblower's tipoff allowed it to launch a speedy investigation and led to a court ordering more than $1 million in sanctions.

“This whistleblower provided the exact kind of information and cooperation we were hoping the whistleblower program would attract,” said Robert Khuzami, director of the SEC's Division of Enforcement. “Had this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.”

The award is equivalent to 30 percent of the sum the SEC has so far collected from the unnamed fraudsters—the maximum percentage payout allowed under the whistleblower program. The SEC says the court is considering whether to issue a final judgment against other defendants in the matter, and any increase in sanctions would increase payments to the whistleblower.

“The payout of this first award, albeit a modest sum, encourages future bounty hunters because it shows that the money is there for quality information,” Ed Ellis, co-chair of Littler Mendelson's Whistleblowing & Retaliation Practice, told InsideCounsel in an email. “We are likely to see additional and larger bounties issued in the near term as the SEC has hundreds of whistleblower cases with settlements in excess of $1 million in the pipeline. The big question for business is whether modern compliance systems are able to detect and remedy misconduct before it goes to the government.”

The whistleblower program stems from the Dodd-Frank Act. It authorizes the SEC to reward individuals who offer high-quality, original information that leads to an enforcement action that leads to more than $1 million in sanctions. Whistleblowers can receive between 10 percent and 30 percent of the sanctions the agency collects. Since the whistleblower program began last year, the SEC has been receiving about eight tips a day.

Read Reuters and the Wall Street Journal for more information about the SEC's first-ever whistleblower award.

For more whistleblower stories from InsideCounsel, read:

Judge rules that Dodd-Frank does not protect foreign whistleblowers

Rolls-Royce faces whistleblower suit

Regulatory: Most SEC whistleblowers tell company first

5 steps to protect against whistleblowers

Whistleblower collects on Citigroup bad loan settlement

Mutual fund workers denied whistleblower coverage

FCA whistleblowers earned a record $532 million in 2011

Does SOX protect whistleblowers who steal confidential information?