You might be wondering what happened to the Whistleblower Bounty Program that was announced with great fanfare as part of the Dodd-Frank Act in the middle of 2010. In the almost three years since that Act was passed, only one bounty has actually been paid–a not very impressive $50,000 payment. But this belies the fact that many more, and likely much larger, bounty payments are just over the horizon.
The Dodd-Frank Bounty Program requires the SEC to pay a bounty of from 10% to 30% of any monetary recovery greater than $1 million that is attributable to original information received from the whistleblower. The Office of the Whistleblower within the SEC was established in early 2011, and it was soon fully-staffed and busily at work, receiving over 3,000 tips in the 12 months ended June 30, 2012. The single payout was made in August 2012.
The reason there has only been one award made so far is the long lead time required to get to an actual payment to a whistleblower. After a tip has been received, it must result in the company being required to pay monetary payments of greater than $1 million, whether through a settlement or administrative proceedings. Of course, finalizing these type proceedings can take many years, and would rarely be complete in as little as one year. Only after a $1 million plus monetary sanction is finalized does the whistleblower submit an application to the SEC for a bounty payment. This then commences a whole new administrative process where the SEC determines if a bounty payment is called for under the statutory conditions and, if so, in what amount.
So, not even the tip of the iceberg has been seen to this point; and there are many more cases winding their way through the administrative process, which will ultimately wind up paying bounties. These will almost certainly include some big, multimillion dollar bounty payments, which are going to get a lot of public attention. Governmental officials should be expected to use that platform to encourage even more tips.
The Chief of the Office of the Whistleblower already has been quoted as saying “We are open for business and ready to pay people who bring us good, timely information.” You can bet that these type statements will be made even more vigorously in conjunction with future multimillion dollar bounty payment announcements. As a result, public awareness of the bounty program, and enthusiasm for becoming a part of it, will increase substantially in the coming months and years. So the bounty program is hardly in a hiatus; to the contrary, the posse is riding hard and the excitement is about to begin!