wallst journal

The Securities and Exchange Commission offers financial rewards for information on wrongdoing. But many tipsters have found it tough to collect.

The SEC’s whistleblower program, set up under a 2010 law, uses the promise of high bounties to encourage more people to report fraud. To date, its payments system, offering 10% to 30% of the penalties in big enforcement actions, has resulted in awards totaling more than $50 million, the SEC says.

Dan David, co-founder of GeoInvesting LLC, a financial-research firm based in Skippack, Pa. said his company has made almost a dozen claims for whistleblower awards for alleged penny-stock frauds and those involving U.S.-listed Chinese stocks. To date, they have been paid “not one dime,” he said.

Mr. David said he would welcome funding his research through whistleblower payments, rather than short sales, but “the whistleblower program is not offering any incentive to exposing frauds in areas where the SEC finds it impossible to collect sanctions.”

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