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New SEC whistleblower office receiving better financial fraud tip-offs, Commissioner says

osha whistle New SEC whistleblower office receiving better financial fraud tip offs, Commissioner saysSo far, so good was the message behind Securities and Exchange Commissioner Luis Aguilar’s assessment of the agency’s new whistleblower program, designed in response to the 2008 financial crisis to curb widespread financial fraud.

Speaking to a panel of enforcement officials Thursday, Mr. Aguilar said that the SEC’s whistleblower office, established by the Dodd-Frank Act in 2010, has received nearly 3,000 tips from the U.S. and 45 foreign countries. But it’s not just the quantity of information pouring into the whistleblower office, it’s the quality as well. Mr. Aguilar said the incentives to report fraud and other wrongdoing have made a noticeable difference in quality of the tips the office receives.

“The quality of the information determines how quickly our staff can act and whether we can increase the odds of capturing true masterminds and whether we can prevent harm from occurring in the first place,” Mr. Aguilar said.

Under the new law, the Commission can provide monetary awards to eligible individuals who provide high-quality, original information that leads to an enforcement action in which more than $1 million is recovered. The range for awards is between 10 percent and 30 percent of the money collected.

The SEC made its first whistleblower-propelled bust in August, paying an informant $50,000 for information that led to more than $1 million in sanctions in a case of securities fraud. The award represented 30 percent of $150,000 collected, with additional payments made to the informant as more sanctions are collected.

According to MarketWatch, Mr. Aguilar shared his take on criticisms aimed at the SEC over its new whistleblower office.

“As we considered the contours of the rules to develop the whistleblower program, we heard repeatedly and loudly that the implementation of the program would overwhelm the commission and literally shut the commission down,” Mr. Aguilar said. “I’m happy to report that the SEC has not been shut down.”

Sources:

Securities and Exchange Commission, Office of the Whistleblower
Marketwatch