The SEC has just released its annual report to congress summarizing the successes of its whistleblower program (available here). Much of the statistics remain fairly consistent with last year, however there are some notable changes. While the total number of tips have increased slightly, the total award sum and largest awards have both decreased a bit, as highlighted below.
- Number Of Tips: The total number of tips received increased roughly 5%, with 4,484 tips received in 2017, up from 4,218 last year.
- Total Awards: Total award sum decreased a little over 10%, with 50 Million awarded to 12 whistleblowers vs 57 Million awarded to 13 whistleblowers in 2016.
- Largest Awards: The largest awards have also decreased slightly. Of the top 10 largest awards to date, only 2 awards from 2017 made the “top 10” list, accounting for a total of 12.5 Million in awards. This is in contrast with 2016 which saw 5 of its largest whistleblower actions totaling 72.5 Million in awards.
- Violations: The most common alleged securities violations remained constant, including; misrepresentations, disclosure violations, and offering fraud, which accounted for a combined 75% of all alleged violations in 2017.
- Origins: When assessing the origins of whistleblower tips/complaints, the majority of domestic tips were received from NY, FL, TX, CA, NJ. One notable change; complaints from Ohio have decreased considerably. The SEC had also received over 550 foreign complaints during 2017 which accounted for 12% of all participating individuals. The majority of foreign tips received originated from the UK, Canada, Australia and China.
- Whistleblowers: Insiders (including current/former employees, consultants and affiliates) accounted for the vast majority of award recipients (62%), followed by investors/prospective investors (19%) and misc outsiders (15%).
- Defendants: The majority of whistleblower actions (approximately half of all actions) were brought against individuals, with the remaining half split just about evenly between public/registered entities and private/unregistered entities.
- Industries: The financial services industry continues to generate the most actions, however there is some speculation that tech companies may become a growing area of interest due to concerns over ICO’s and fraud (among others).