SEC Sets Aside $452 Million for Whistleblowers

A new report from from the Securities and Exchange Commission shows that the agency has set aside $452 million to establish a new "whistleblower" fund.

Earlier this year, as part of sweeping financial reform regulation, the SEC received more authority to pay whistleblower awards and enhance the anti-retaliation protections available to whistleblowers.

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For nearly two years, the agency has been shamed by critics for lapses that they said allowed crimes like the Ponzi scheme managed by jailed ex-financier Bernard Madoff to continue for so long. SEC officials are hoping that the fund will offer an incentive for people to speak up if they are aware of a financial fraud that is being committed.

In order for an person to qualify for a payout, the amount collected due to a sanction must be over $1 million. Based on the amount of the monetary sanctions collected when the agency brings successful action, 10% to 30% of the money goes to a whistleblower. Also, the whistleblower must have voluntarily provided the SEC with "original information about a violation of the federal securities laws that leads to the successful enforcement of a covered judicial or administrative action, or a related action."