The Securities and Exchange Commission’s new whistleblower program took effect Friday, and the SEC has created a new Web page where people can report a violation of the federal securities laws and apply for a financial award.

Robert Khuzami

The Dodd-Frank Wall Street Reform and Consumer Protection Act provided the SEC with the authority to pay financial rewards to whistleblowers providing new and timely information about any violation of the securities laws. To be eligible, the whistleblower's tips must lead to a successful SEC enforcement action with more than $1 million in monetary sanctions.

The new Web page, www.sec.gov/whistleblower, provides information on the various eligibility requirements, along with directions on how to submit a tip or complaint to the SEC, instructions on how to apply for a whistleblower award, and answers to frequently asked questions.

"Early and quick law enforcement action is the key to preventing securities fraud and avoiding investor losses, and the whistleblower program gives us the tools to help achieve that goal," said SEC enforcement director Robert Khuzami in a statement.

The whistleblower program isn’t entirely new for the SEC. Prior to the enactment of the Dodd-Frank Act, the SEC only had authority to reward whistleblowers in insider trading cases.

In recent months, however, the SEC said it has already seen an increase in the quality of tips it has been receiving from individuals since Congress created the program. However, the new program provides potential whistleblowers with greater incentives to come forward sooner rather than later with "timely" information that is not yet known to the SEC.

The SEC said the program also makes the most of outside resources. “With fewer than 4,000 employees to regulate more than 35,000 entities, the SEC cannot be everywhere at all times,” said the commission. “With a robust whistleblower program, the SEC is more likely to find and deter wrongdoing at firms it may not have otherwise uncovered.”

Employees who come forward under the program now have new tools that can protect them against retaliation by their employers.

The new rules also provide incentives for employees to report any wrongdoing to their company's internal compliance department before approaching the SEC. Companies that would prefer their employees report internally first, as they generally do, have more incentives to put in place a credible, effective compliance program.

The SEC adopted final rules on May 25 to implement the Dodd-Frank whistleblower program. Those who wish to be considered for an award under the whistleblower program have to submit an online questionnaire or the newly approved Form-TCR.