The 2010 Dodd-Frank financial reform act was meant to address many of the worst transgressions perpetrated by large financial institutions. The act established many methods of dealing with fraud and corruption but, now, one weapon to deal with fraud may become more of a factor.
To date, the Securities and Exchange Commission (SEC) has only given out three monetary awards to people who blew the whistle on corporate fraud, but the award handed out on Sept. 30 was by far the largest, and may serve as incentive for more individuals to come forward.
People who report violations of securities laws to the SEC are eligible for an award if that information leads to enforcement action with sanctions greater than $1 million. Whistleblowers can receive up to 30 percent of any monetary penalty. The award that was handed out on Monday was $14 million, which means that the monetary sanctions on the company totaled at least $46.7 million.
The SEC did not reveal much information about the award but such a large payout may encourage more people to come forward when they witness instances of fraud. The Wall Street Journal indicated that there are many cases pending at the SEC that could reap significant awards for whistleblowers.
Of course, that is the whole point – the SEC wants to encourage whistleblowing. “While it is certainly gratifying to make this significant award payout, the even better news for investors is that whistleblowers are coming forward to assist us in stopping potential fraud in its tracks so that no future investors are harmed,” said Sean McKessy, chief of the SEC’s office of the whistleblower in a press release. “That ultimately is what the whistleblower program is all about.”
The chair of the SEC, Mary Jo White, will be present at the Women, Influence & Power in Law Conference, running from Oct. 2-4 in Washington, D.C. Chair White will discuss her personal story, her challenges and triumphs, and will take questions about topics that are relevant to the SEC today.