In October 2016, the Securities and Exchange Commission (SEC) announced its enforcement results for Financial Year 2016, which ended on Sept. 30, 2016. The SEC reported that it brought 868 enforcement actions in 2016, a steady increase from 2014 (755 actions) and 2015 (807 actions). The agency also distributed a record $57 million to 13 whistleblowers in 2016 – more than all previous years combined and $20 million more than the agency awarded in each of the past two years.
The increase in enforcement actions and whistleblower awards was accompanied by record numbers of cases involving investment advisers or investment companies and Foreign Corrupt Practices Act enforcement actions. The agency did, however, see a decrease in total disgorgement and penalties ordered from roughly $4.2 billion to a still strong $4 billion.
The SEC’s 2016 results are encouraging for whistleblowers. In addition to the record awards, the agency took two other major steps in favor of whistleblowers by 1) bringing its first stand-alone action for retaliation against a whistleblower and 2) charging multiple companies for using confidentiality agreements or other actions to prevent whistleblowers from communicating with the SEC.
The SEC’s continued focus on combating financial misconduct serves to deter misconduct and to incentivize whistleblowers to come forward to report illegal activity. The steady rise in enforcement actions and the dramatic increase in whistleblower awards has not shown signs of slowing down. Should the trends continue, whistleblowers, investors and financial markets will benefit from the SEC’s commitment to robust enforcement.