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SEC Whistleblower Wins the Lottery

Some lucky whistleblower, reporting to the Securities and Exchange Commission (SEC) just won the lottery. The SEC reported Monday that it has paid out a whopping $30 million to a non US citizen for information about fraudulent financial activity.

The giant payout is the largest award ever paid by the Commission, doubling the previous record and exceeding by nearly one hundred percent, the total of all payouts for fiscal 2013, as reported by The Wall Street Watchdog.

The SEC declined to comment on the identity of the whistleblower, nor did it offer any clues as to who this person might be, nor what information he or she may have given to the Commission, simply stating that the individual lived outside the U.S.

“This whistleblower came to us with information about an ongoing fraud that would have been very difficult to detect,” said Andrew Ceresney, director of the SEC’s Division of Enforcement. “This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement.”

Even though the SEC refused to offer any information about the alleged wrongdoing reported by the whistleblower, the terms of the SEC’s whistleblower program indicate that the agency typically pays out between 10 and 30% in recoveries to whistleblower that are instrumental in producing results. This means that the agency must have recovered somewhere between $300 million and $900 million as a result of the tip.

The Dodd-Frank financial reform law directed the SEC to establish a whistleblower program as a way to entice members of the financial community to come forward with information of wrongdoing.

Under the program, individuals that come forward voluntarily with original information about a possible violation of securities law can receive a monetary award equal to 10 percent to 30 percent of the money collected by the SEC. This reward sharing provision is one that is mirrored in other whistleblower laws, including those used by the Internal Revenue Service (IRS), the Department of Justice (DOJ), the Department of Labor (DOL) and the Occupational Safety and Health Administration (OSHA).

The SEC has slowly grown the program since its inception, rewarding just one whistleblower in fiscal 2012 and growing each year to giving rewards to nine in fiscal 2014.

The previous record for a whistleblower payment was $14 million, given to an unidentified individual in October 2013.