SEC Gives $300K to Whistleblower Working in Audit/Compliance

The U.S. Securities and Exchange Commission said it awarded more than $300,000 to a whistleblower who first reported wrongdoing internally — but then went to the feds after being ignored for four months.

The SEC typically doesn’t reveal details about the people who receive awards under the Dodd-Frank Act, since the law grants confidentiality to whistleblowers, but the agency said this was its first-ever payout to a person who worked in a company’s audit or compliance areas.

The award shows that even officials whose job is to fight fraud within a company can be rewarded for reporting wrongdoing to the SEC — after they’ve fulfilled their work duties to no avail. Such officials are “on the front lines in the battle against fraud and corruption,” said Sean McKessy, head of the SEC’s Office of the Whistleblower.

Congress passed the Dodd-Frank Act in 2010 to tighten financial regulations in the wake of the 2008 fiscal crisis. Among other things, the law established the SEC’s whistleblower program, which pays bounties of 10% to 30% to informants who provide significant help in cases that result in recovery of more than $1 million.

Whistleblower awards aren’t deducted directly from the SEC’s receipts; instead they come from a special “Investor Protection Fund” created by the Dodd-Frank law.

Tagged: Dodd-Frank Act, Enforcement Bodies, Fraud Types, Securities and Exchange Commission (SEC), Securities Fraud, Whistleblower Laws (Federal)