In a comment letter recently sent to the SEC, one firm describes how in a span of just 10 days it had already “filed several whistle-blower complaints with the SEC, pursuant to the new statute, involving major Wall Street firms, which filings appear to implicate hundreds of millions of dollars, if not more, of investor related fraud issues, including on behalf of former senior employee(s) of entities.”

The fact that these whistleblower claims are starting to roll in under the new whistleblower provisions of Dodd-Frank is not unexpected. As described in Steve’s posting, the new rules provide, among other things, that if a whistleblower provides original information in certain judicial or administrative actions, the whistleblower may be entitled to as much as 10% to 30% of the monetary sanctions imposed. In fact, anyone who provides a tip that leads to a successful SEC action resulting in total monetary sanctions in excess of $1 million will be entitled to collect between 10% and 30% of the amount recovered. Penalties, disgorgement and interest paid count toward the $1 million threshold.

The SEC’s whistle-blowing program used to be limited to insider trading cases and offered only small discretionary rewards ranging from 0% to 10% of the money recovered. Dodd-Frank extends the program beyond insider-trading cases to all securities law violations and offers bigger, mandatory payoffs and therefore greater incentive to come forward with information. We can expect to see more whistleblower complaints than ever before.