by Bill Singer
On August 12, 2011, the Securities and Exchange Commission’s (“SEC’s”) new Whistleblower rules become effective. The Whistleblower program will supposedly pay to eligible whistleblowers between 10 and 30 percent the monetary sanctions collected by the SEC. To be eligible, you need to voluntarily provide the SEC with original information that leads to a successful SEC action with sanctions exceeding $1 million. The SEC will post a Notice of Covered Action, which will provide eligible whistleblower with 90 calendar days to apply for an award by submitting a completed Form WB-APP to the Office of the Whistleblower.
Eligible Whistleblower: a person who voluntarily provides the SEC with original information about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur. The information provided must lead to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million. One or more people are allowed to act as a whistleblower, but companies or organizations cannot qualify as whistleblowers. You are not required to be an employee of the company to submit information about that company
Voluntarily Provided Information: You provide to the SEC or another regulatory or law enforcement authority before
(i) such organizations requested the information from you or your lawyer or
(ii) Congress, another regulatory or enforcement agency or self-regulatory organization (such as FINRA) asks you to provide the information in connection with an investigation or certain examinations or inspections.
Original information: Information derived from your independent knowledge (facts known to you that are not derived from publicly available sources) or independent analysis (evaluation of information that may be publicly available but which reveals information that is not generally known) that is not already known by the SEC. Information previously received from another person may nullify your submission as being “original,” unless you were the original source of the information that the other person submitted.
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