It was a very modest start.
The Securities and Exchange Commission rolled out its first whistle-blower award on Tuesday, a $50,000 payment to an anonymous informant who helped bring down a Ponzi scheme. So far, the government has recovered $150,000.
"It's about as straightforward and vanilla as you're going to get," says Lyle Roberts, a securities litigation attorney for Cooley LLC's D.C. office. "But it shows the system's up and running to some extent."
The SEC's whistle-blower program — for which it set aside $452 million in 2010 — has been up and running for just over a year. In the announcement of the award, whistle-blower program director Sean McKessy stated that his team was receiving eight purported whistle-blower tips a day.
"We are open for business and ready to pay people who bring us good, timely information," McKessy said.
The program itself is not loved by business or financial trade groups, and some whistle-blower advocates worry that it will be marginalized.
"This is the kind of award that no one will take any offense with," said Edward Siedle, an attorney who has played a role in past whistle-blower cases and submitted allegations to the SEC. "I view this as a placeholder."
The payout still serves as a reminder of the SEC's additional tools, Roberts said.
"You're probably going to need a few years to look back and really see how they've done," he said.
