The law has introduced new measures to curb vices in securities markets referred by many as the last Wild West. SEC has introduced a whistleblower program that is aimed at providing tips and information to the SEC where the provider of the information is rewarded in turn.
The program is run and administered by a former security and exchange commissions’ enforcement lawyer. People who report misconducts by companies or individuals, which qualify to be a violation of the commodity exchange act, are rewarded for their efforts.
The individuals who give tips are rewarded 10 to 30 percent of the value of the unlawful trades that they help stop. This figure is then converted into money and the tipster compensated the full amount through an investor protection fund.
The program functions with the following modalities.
First, the person giving the tips makes his submission to the SEC. The SEC reviews the files and determines if the matter filed is enough to warrant investigations to the case submitted. These preliminary reviews are conducted by the office of market intelligence.
If the office determines that the matter need more investigations, it assigns the case to one of its regional offices. Subsequently, the office decides that a case does not warrant further investigations. On such scenarios, the case is classified as a no further action. The tipster has the right to appeal the decisions made by the office of market intelligence.
If the case goes through the first stage, it is forwarded to the whistleblower program where it is assigned to an officer responsible for all fraud investigations. The office requires that the whistleblower further offers any information that may be valuable to the investigation.
The whistleblower program is responsible for all paperwork that relates to all fraud cases. The officers also follow up on investigations to make sure all the documents in the case are properly filed and available for review. This is particularly helpful in determining compensation for whistleblowers since all the documents related to a case are available to help in processing the rewards.
Once investigations on a case have been concluded, and the tipster established to have revealed crucial information, he can go ahead to claim the rewards for his good actions by submitting a WB-APP application form.