SEC encouraging electronic filings from whistleblowers

SEC encouraging electronic filings from whistleblowers

Regulator to pay out millions of dollars in bounties

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The US Securities and Exchange Commission is encouraging whistleblowers to contact it with electronic evidence of market fraud in return for big bounties, it has been reported.

The SEC programme allows whistleblowers to qualify for 10 to 30 percent of the amount of cash that is recovered by the SEC through the courts or through a settlement as a result of an investigation.

As many investigations are around alleged frauds involving many millions of dollars, whistleblowers who can provide incriminating emails, recorded phone conversations or documents can receive huge amounts for turning on current or ex-bosses in the financial services industry.

Sean McKessey, chief of the SEC's whistleblower office, told the Financial Times: "We've received notes, audio recordings of conversations and simple recollections. We've been very pleased with the whistleblower tips either because they're from somebody working at the company they're complaining about or there's a sufficient amount of specificity, or both."

One whistleblower tip is said to have formed the basis for opening a SEC case last week, the FT reported.

Law firms keen to represent whistleblowers in the UK, Nigeria, the Netherlands and elsewhere are said to have expressed interest in taking advantage of the SEC reporting scheme.

The SEC scheme is said to have been going for the last eight months, but so far no one been given a bounty, the newspaper noted.

Last month the US Food and Drug Administration (FDA) admitted that it monitored the private email accounts of nine agency whistleblowers to determine whether any of them had leaked confidential information to the public. Six of the whistleblowers have filed a lawsuit alleging the FDA had violated their privacy and constitutional rights as a result.

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