The SEC says that to date about 40% of its whistleblower awards have gone to insiders (current or former employees of implicated firms) and 20% to contractors or consultants. However, the SEC encourages whistleblower tips from anyone.

In one 2013 case, the SEC says that it awarded a whistleblower $150,000 for exposing a scheme to defraud investors: "The whistleblower in this matter provided significant information that allowed the SEC to quickly open an investigation and obtain emergency relief before additional investors were harmed."

According to the Dodd-Frank law, for a whistleblower submission to be considered, it must be original information derived from independent knowledge or analysis. Information contained in public filings can be considered original, when the analysis reveals information not generally known or available to the public.

The law also requires the SEC to respect the confidentiality of whistleblowers by not revealing their identities. Information may be submitted through an attorney without revealing the whistleblower's name to the SEC, and several prominent legal firms now specialize in representing SEC whistleblower cases.

Sean McKessy, chief of the Office of the Whistleblower, has provided this guidance: "People often call us to ask if they should submit something, or submit an update, and we will almost always suggest that you submit it. As I often tell people, you never know what information may be the last piece of the puzzle for an investigation. Additionally, we explain that what may seem small or insignificant to you might be critical to an investigation."

A key point: You don't have to submit a whistleblower tip to protect your clients. If everyone in the industry just knows about the Office of the Whistleblower and understands McKessy's advice, the securities industry will become a better place to invest.