iOS app Android app More

SEC Pays Financial-Fraud Whistleblowers Better Than FBI

The Huffington Post  |  By Posted: 02/29/2012 10:58 am Updated: 02/29/2012 11:00 am

Sec Whistleblower

Getting ready to blow the whistle? Be careful who you hand the information to.

Whistleblowers who go to the FBI to tip them off about financial fraud "are probably going to get zero" in the way of monetary rewards, according to David Colapinto, a whistleblower lawyer quoted in The Washington Post earlier this week.

Colapinto goes on to say that whistleblowers who want to get compensated for their tip should probably talk to someone at the Securities and Exchange Commission, where, if their intel leads to a penalty of more than $1 million, tipsters can get between 10 and 30 percent of that cash for their trouble.

Certainly, plenty of people are trying to cash in. In the first seven weeks that the SEC began offering 10 cents on the dollar for actionable information, the agency reported getting 334 tips, shaking out to almost seven tips a day, or a new one every three and a half hours.

The SEC might be getting even more tips if more Americans knew the agency's reward program existed. Nearly 70 percent of Americans are unaware that the SEC has such an incentive in place, according to a recent poll from the law firm Labaton Sucharow -- despite that more than one-third of people said they know about misconduct in their own workplace, and more than three-quarters of people said they'd be willing to report it if they were compensated in some way.

Even though the FBI likely isn't paying people to tip them off, it's still pulled out other stops in an aim to boost the number of tips it receives. The agency recently put out a public service announcement featuring famed actor Michael Douglas asking Americans to forward any tips about financial crime.

Still, FBI investigators have managed to find enough financial crime work to keep them occupied. The bureau recently announced that its investigations of fraud, insider trading and Ponzi schemes last year resulted in 3,000 convictions and some $12 billion in restitution, according to the Associated Press.

In general, the financial crisis seems to have put Americans more on alert for white-collar crime -- which may be one of the reasons why businesses strenuously opposed the SEC's reward program back when it was first being considered.

And Americans' new hyper-aware attitude is showing in their level of complaints. Financial-fraud complaints to the Federal Trade Commission have jumped 62 percent since 2008, according to a recent research brief from Boston College, with 1.5 million complaints arriving in 2011 alone.

Also on HuffPost:

FOLLOW BUSINESS