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Whistleblower tips to SEC up 10% in 2014

Whistleblower tips to SEC up 10% in 2014

The number of whistleblower tips and complaints to the U.S. Securities and Exchange Commission's Office of the Whistleblower increased 10.1% from the previous year to 3,620 in fiscal year 2014, while there was a record number of awards, the SEC reported.

The increase in whistleblower tips compares with the 7.9% increase reported in 2013, according to the SEC's 2014 annual report to Congress on the whistleblower program established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The program, under which whistleblowers receive 10% to 30% of monetary sanctions collected, is mandated by Dodd-Frank. Whistleblowers' names are not revealed.

The commission has now authorized awards to 14 whistleblowers, including nine in fiscal year 2014 alone, according to the report, released Tuesday.

In September, the office awarded more than $30 million, a record-breaking amount, to a whistleblower who provided key original information that led to a successful enforcement action, according to the report, which was issued Tuesday.

The report states also that there have been significant additional payments being made to individuals who had received awards in previous years, as additional amounts are recovered. For example, its first award recipient's initial payment of nearly $30,000 now totals more than $385,000.

California, Florida, New York and Texas were the top states from which the highest number of whistleblower tips originated in 2014 fiscal year, according to the report, which states also that tips have been received from individuals in 83 countries outside the United States, including the United Kingdom, India, Canada, China and Australia.

Commenting on the report, Steven J. Pearlman, a partner with law firm Proskauer Rose L.L.P. in Chicago, said, “I think that we would expect to see for the fiscal year 2015 report is another increase, and probably a marked increase, because of the $30 million award. The concern from an employer perspective is that this may very well lead to a lottery-playing dynamic.”

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