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Note 16 Earmarked Funds

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Earmarked funds arise from disgorgement and penalty collections and are transferred to the Customer Protection Fund (CPF), established by the Dodd-Frank Act. The collections are transferred from the custodial receipt account if they are found to be eligible before the end of each fiscal year. In cases where the collection has been returned to the Treasury Department, the Commission can recover the funds directly from Treasury. The collections will fund the Commission's whistleblower awards program and customer education initiatives.

The Dodd-Frank Act provides that whistleblower awards shall be paid under regulations prescribed by the Commission. An important prerequisite to implementation of the whistleblower awards program is the issuance of rules and regulations describing its scope and procedures. The Commission issued final rules implementing the Act on August 25, 2011. These rules became effective on October 24, 2011. The Commission plans to establish the Whistleblower Office in FY 2012.

At the end of FY 2011, the fund had a balance of $23,755,000. During FY 2011, $18 million was recovered from the Treasury Department for eligible collections returned at the end of FY 2010 and $5,755,000 was transferred from eligible collections in FY 2011.


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