From the September 2010 issue of Treasury & Risk magazine

SEC Bounty Hunters

Dodd-Frank and the SEC's zeal make it easier and more lucrative for whistleblowers to tip the feds off to securities violations.


The shudder felt in C-suites across the country in late July was not an earthquake, but the trembling of corporate executives and general counsels contemplating back-to-back events that could presage a much more aggressive approach to securities law violations by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Dodd-Frank financial reform bill signed into law on July 22 includes a provision that mandates the SEC, as well as the CFTC, to award a bounty of 10% to 30% to any whistleblower who provides significant information about securities fraud involving a public company, or even a private company owned by a public company, that results in a judgment in excess of $1 million.

On July 23, the SEC granted an unprecedented $1 million bounty to Karen Kaiser and her husband Glen, of Southbury, Conn., because she provided data that helped the agency win a $28 million settlement, including a $10 million penalty, against hedge fund Pequot Capital Management.

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