On October 1^st, the SEC announced its third award paid under the Dodd-Frank whistleblower provisions. This time, it was a big one. The SEC paid the whistleblower in question more than $14 million after this person gave information leading to “an SEC enforcement action that recovered substantial investor funds.” Several things occur to me about this.

First, we don’t know very much at all about this award. While the SEC’s rules provide for the payment of 10-30% of monetary sanctions collected to a whistleblower who has brought original information to the Commission leading to the enforcement action in question, it’s unclear where we are on the scale with this payment. To be sure, the SEC will do what it can to protect a whistleblower’s identity, but I’m a bit surprised they’ve been able to go this far: to the point that a significant payment could go out the door and the recipient be wholly protected from disclosure. Future whistleblowers should take heart from this commitment to confidentiality, but there are hardly even tea leaves to read here.

Second, I suspect that this is the first of many larger awards. Dodd-Frank is a bit over three years old now, and only information that came in after July 21, 2010 can count as “whistleblower” information under that statute. It often takes a long time to put securities cases together, and there may be a number in the pipeline that were started with whistleblower information. This one could be the first of many.

Finally, check out this unrelated article from the Wall Street Journal from the same day. It discusses an insider’s assistance in assembling what may be an $11 billion case against JPMorgan Chase over its handling of residential mortgage-backed securities. Let me be the first to say that if this insider is somehow construed to be a Dodd-Frank whistleblower, it will not be good for the SEC’s program. This could happen under Rule 21F-4(c)(2) if an SEC whistleblower’s information “significantly contributed” to a Justice Department action. Even at the low end of the range, 10% of $11 billion is, by my sophisticated calculations, $1.1 billion. It will not strike outside observers as legitimate if an individual is allowed to become a billionaire from the SEC’s whistleblower program. I sort of hope for everyone involved that it doesn’t turn out that way.