[ by Howard Haykin ] Given the current high level of disregard or disdain for compliance and ethics in the industry, there's little doubt that whistleblowers there may never been a better time than now for blowing the whistle on broker-dealers, banks, fund managers and other institutions.  In fact, one could almost hear SEC officials expressing their surprise at not having received more tips than they have.

Sean McKessy, Chief of the SEC’s Whistleblower Office, said that since the program was established in August 2011, about 8 tips a day are flowing into the SEC.  "The fact that we made the first payment after just one year of operation shows that we are open for business and ready to pay people who bring us good, timely information."

However, none of that was mentioned by SEC Chairman Mary Schapiro in marking the occasion of the first whistleblower payoff payout.  What Ms. Schapiro did say was that the whistleblower program is becoming a success, and the Agency has seen high-quality tips that have saved SEC investigators substantial time and resources. Initial Award. The first whistleblower to receive an award for his or her tip received nearly $50,000 for leading the SEC to a multi-million dollar fraud.  This the first award from the Agency's new program represents 30% of the amount collected in the resulting SEC enforcement action - the maximum percentage permitted. The award recipient, who wishes to remain anonymous, provided documents and other significant information that allowed the SEC's investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims.  His or her assistance led to a court order for more than $1 million in sanctions.  The court is considering whether to issue a final judgment against other defendants in the matter - with any additional sanctions raising the award to the whistleblower. Odd Whistleblower Out. The SEC did not approve a claim from a 2nd individual seeking an award in this matter because the information provided did not lead to or significantly contribute to the SEC’s enforcement action, as required for an award. Criteria for Awards Under Dodd-Frank. The 2010 Dodd-Frank Act authorized the whistleblower program to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered. Awards can range from 10% - 30% of the money collected.  The Dodd-Frank Act included enhanced anti-retaliation employment protections for whistleblowers and provisions to protect their identity. The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower's identity. For additional information, go to:   [SEC PR 12-62, 8/21/12] and ... [SEC Order Release 34-67698] and [SEC Order Release 34-67699]. For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.