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From Securities Regulation Daily, March 2, 2015

Officer to get up to $575,000 for blowing whistle on compliance woes

By Mark S. Nelson, J.D.

The SEC said today that it will award between $475,000 and $575,000 to a former company officer who voluntarily provided original information to the SEC under the whistleblower law added by the Dodd-Frank Act. Typically, a company executive would be ineligible for these awards. But in a first, the Commission determined that an exception applied because the officer waited the needed 120 days to contact the SEC (In the Matter of the Claim for Award, March 2, 2015).

In a press release, the SEC’s enforcement Director, Andrew Ceresney, lauded the officer for coming forward about the company’s internal compliance systems. This is the agency’s fifteenth award under the program, which now has paid out nearly $50 million. Awards can range from 10 to 30 percent of the sanctions collected from those charged by the agency.

Sean McKessy, Chief of the SEC’s Office of the Whistleblower, emphasized how the agency’s whistleblower program can help expose companies’ internal compliance defects. “Receiving information and cooperation from company insiders is particularly useful in the early detection of securities fraud, and we will continue to leverage whistleblower information to help combat securities law violations and better protect investors and the marketplace,” said McKessy.

The claimant opted not to contest the agency’s preliminary determination of the payout. But the claimant’s identity will remain unknown because the Commission is legally bound not to disclose information about the identity of those who report under the whistleblower law.

The release is No. 34-74404.

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