SEC’S ANNUAL REPORT ON THE DODD-FRANK WHISTLEBLOWER PROGRAM POINTS TO EXPANDING RESPONSE TO PROGRAM—MORE WHISTLEBLOWER TIPS AND MORE AWARDS TO WHISTLEBLOWERS

On November 16, 2015, the SEC released its Annual Report to Congress on the Dodd-Frank Whistleblower Program. The Report touts the success of the Whistleblower Program by highlighting its receipt of over 4,000 tips in fiscal year 2015. This number is up 8% from fiscal year 2014, 20% from fiscal year 2013, and 30% from fiscal year 2012. The Report also emphasizes that out of 130 award claims, 8 whistleblowers were awarded a total of more than $37 million in fiscal 2015. This $37 million is a substantial percentage of the $54 million paid to 22 whistleblowers since the new whistleblower rules went into effect in August 2011. Additionally, the Report highlights that whistleblowers come from all sorts of different places. In fiscal year 2015, whistleblower tips came from every state and 61 foreign countries. In particular, the number of different foreign countries from which tips originated points to the international growth of the program. Surprisingly, less than one half of all whistleblower tips came from corporate insiders. According to the Report, those non-insiders include victimized investors and individuals with a “personal relationship with the alleged wrongdoer.”

Also of interest is that almost 4 out of 5 whistleblowers stated that they raised their concern internally before going to the Commission or that their supervisors were aware of their concerns before they went to the Commission. This may shed additional light on the reasoning behind the SEC’s August 4th release of a rule interpretation supporting its view that a person who reports possible wrongdoing internally, but not to the SEC, is still protected as a “whistleblower” on which we have previously blogged. Click here to read the prior post.

In addition to touting the numerical success and growth of the Program, the Report highlights the whistleblower program’s involvement with Enforcement staff in helping ensure individuals feel safe reporting to the Commission without fear of reprisal from their employer. In pursuit of that end, the Commission brought charges under Rule 21F-17(a) against a company for including language in confidentiality agreements that impeded whistleblowers from reporting to the Commission by prohibiting employees from discussing the substance of interviews they gave in internal investigations without approval of the company’s legal department. Further, 2015 saw the Commission’s first successful anti-retaliation enforcement action under the Dodd-Frank Act stemming from a whistleblower’s original information. That whistleblower received a 30% award, the statutory maximum, for providing the Commission with original information that led to the successful enforcement action.

The steady growth of the whistleblower program in terms of number of tips, dollar amount of awards, and geographic diversity of where tips originate seem to point to the continued expanded response to the Program.

Click here to read the entire Annual Report.