On August 12, 2011, the SEC's new whistleblower program officially become effective. The SEC launched a new Web page for people to report a violation of the federal securities laws and apply for a financial award. The SEC's new Web page includes information on eligibility requirements, directions on how to submit a tip or complaint, instructions on how to apply for an award and answers to frequently asked questions.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provided the SEC with the authority to pay financial rewards to whistleblowers who provide new and timely information about any securities law violation. Among other things, to be eligible, the whistleblower's information must lead to a successful SEC enforcement action with more than $1 million in monetary sanctions. Whistleblowers who meet these requirements are eligible to receive 10% to 30% of the monetary penalties recovered by the SEC.
The SEC adopted final rules on May 25, 2011, which are discussed in the June 6, 2011 issue of the Securities & Financial News to Note Bulletin, to implement the Dodd-Frank Act whistleblower program. Prior to the enactment of the Dodd-Frank Act, the SEC only had authority to reward whistleblowers in insider trading cases.