The Securities and Exchange Commission Wednesday adopted rules that could reward individuals who blow the whistle on illegal activity in securities markets, with bounties on successful prosecutions.

To be considered for an award, the SEC’s whistleblower program requires the individual to provide "original information" that leads to the successful enforcement by the SEC of a federal court or administrative action where penalties exceed $1 million.

Whistleblowers could be paid from 10 percent to 30 percent of the money paid in such cases.

Prior to the Dodd-Frank Wall Street Reform Act, the agency’s bounty program was limited to insider trading cases and the amount of an award was capped at 10 percent of the penalties collected in the action.

“For an agency with limited resources like the SEC, it is critical to be able to leverage the resources of people who may have first-hand information about violations of the securities laws,” said SEC Chairman Mary L. Schapiro. “While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law."

The SEC’s rules will be effective 60 days after they are submitted to Congress or published in the Federal Register.

Here is a summary of the requirements. A whistleblower must:

Voluntarily provide the SEC …

• In general, a whistleblower is deemed to have provided information voluntarily if the whistleblower has provided information before the government, a self-regulatory organization or the Public Company Accounting Oversight Board asks for it directly from the whistleblower or the whistleblower’s representative.

… with original information …

• Original information must be based upon the whistleblower’s independent knowledge or independent analysis, not already known to the Commission and not derived exclusively from certain public sources.

… that leads to the successful enforcement by the SEC of a federal court or administrative action …

• A whistleblower’s information can be deemed to have led to a successful enforcement action if:

1. The information is sufficiently specific, credible and timely to cause the Commission to open a new examination or investigation, reopen a closed investigation, or open a new line inquiry in an existing examination or investigation.

2. The conduct was already under investigation when the information was submitted, and the information significantly contributed to the success of the action.

3. The whistleblower reports original information through his or her employer’s internal whistleblower, legal, or compliance procedures before or at the same time it is passed along to the Commission; the employer provides the whistleblower’s information (and any subsequently-discovered information) to the Commission; and the employer’s report satisfies prongs (1) or (2) above.

… in which the SEC obtains monetary sanctions totaling more than $1 million.

• The rules permit aggregation of multiple Commission cases that arise out of a common nucleus of operative facts as a single action. These may include proceedings involving the same or similar parties, factual allegations, alleged violations of the federal securities laws, or transactions or occurrences.