On November 16, 2015, The U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower recently issued its Fiscal Year 2015 annual report, which highlights the increasing number of tips received under the whistleblower program – 3,923 tips from whistleblowers in fiscal year 2015.
This represents an eight percent increase from fiscal 2014 and a 30 percent increase from the number of tips received in fiscal 2012, the program’s first full year. The report also noted that the SEC paid more than $37 million to eight whistleblowers in fiscal 2015. The report emphasized some of the more significant awards, including:
- The award to a whistleblower in the SEC’s first anti-retaliation case
- The record $30 million award to a whistleblower announced on September 22, 2014
- The award of more than $1 million to a compliance professional who provided information leading to a successful enforcement action
- The half-million dollar award to a former company officer
Here is a breakdown of the tips received:
- The SEC received more than 2,800 phone calls from the public. The most tips originated in California, Florida, New York, Texas, and New Jersey.
- Tips came from 61 foreign countries, with the bulk of those tips originating from Britain, India, Canada, China, and Australia.
- The type of tips remained relatively consistent with prior year results. The most common types of complaints reported included: corporate disclosures and financials (18 percent), offering fraud (16 percent), and manipulation (12 percent).
The report provides some details on the individuals who have received awards since the whistleblower program’s inception:
- Almost 50 percent of the individuals receiving awards were current or former company employees when they reported information regarding wrongdoing.
- Of the award recipients who were current or former employees, approximately 80 percent raised their concerns internally to their supervisors or compliance personnel before reporting information to the SEC.
Besides the numbers, the SEC focused on two primary whistleblower issues:
- The report describes its In re KBR enforcement action under Rule 21F-17(a), which prohibits any action that “impedes” an individual from communicating with the SEC staff about a possible securities law violation. (See April 2, 2015, Legal News, “SEC Brings Enforcement Proceeding Relating to Confidentiality Agreements That May Stifle Whistleblowers”). The annual whistleblower report notes that the SEC “will continue to focus on agreements that have language that could reasonably have the effect of impeding whistleblowers from reporting securities violations to the Commission.”
- The report notes the SEC’s efforts to clarify that the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) retaliation protections apply when employees internally report potential securities law violations and the Second Circuit’s recent ruling in Berman v. Neo@Ogilvy LLC, in which the court deferred to the SEC’s view. (See September 14, 2015, Legal News, “Second Circuit: No SEC Reporting Requirement in Dodd-Frank Whistleblower Provisions”).