Why it matters
The Securities and Exchange Commission's whistleblower program continues to grow, as evidenced by the agency's Office of the Whistleblower annual report for 2015. In the prior fiscal year, whistleblower tips came in from all 50 states for a total of 3,923—an increase of 8 percent over the prior fiscal year and a 30 percent increase of the tips received in FY 2012, the first year of the program. Employees in 61 different foreign countries filed tips (led by the United Kingdom and Canada), accounting for 10 percent of all reports to the agency. The whistleblowers reported on a variety of alleged wrongdoing, from Foreign Corrupt Practices Act-related activity to insider trading to problems with corporate disclosures. The financial incentives provided by the agency increased as well, with eight awards doled out in FY 2015 totaling $34 million and the first 30 percent recovery award (the maximum amount permitted by statute) in the first anti-retaliation case. Recognizing the continued growth, the SEC said it anticipates "that the whistleblower program will continue to be 'a game changer' in the enforcement of the federal securities laws and the protection of investors and the marketplace," adding that the agency wants "whistleblowers—and their employers—to know that employees are free to come forward without fear of reprisals."
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Securities and Exchange Commission (SEC) to establish a new program for corporate whistleblowers. The SEC's Office of the Whistleblower (OWB) began its efforts in August 2011, and each year since, the agency has seen the number of reports—and the related awards—increase.
In fiscal year 2015, the OWB received a total of 3,923 tips from whistleblowers across the globe, representing every state, the District of Columbia, and 61 different foreign countries (led by the United Kingdom with 72 tips, Canada with 49, and 43 from China). Foreign tips accounted for about 10 percent of all reports during FY 2015.
The 2015 number of tips represents an increase of 303 or more than 8 percent over FY 2014 and a rise of almost 30 percent since FY 2012 when the program began. The 3,923 figure brings the overall total to 14,116, the SEC said.
Whistleblowers reported on a broad range of activity, from Foreign Corrupt Practices Act-related activity to insider trading. The top three most common complaints were Corporate Disclosures and Financials, Offering Fraud, and Manipulation.
As for financial recovery, the OWB reported $54 million in whistleblower awards since the program began with $37 million paid out in FY 2015 alone to eight whistleblowers. Of those eight awards, one was for the first ever of 30 percent of the amount recovered by the SEC, the largest percentage allowed under the Dodd-Frank Act. That case also happened to be the agency's first anti-retaliation case.
The SEC highlighted another first: the first enforcement action against a company for using language in confidentiality agreements that impeded a whistleblower from reporting possible securities law violations. In a message from the Chief of the OWB, Sean X. McKessy, the agency promised similar actions in the future, noting that "[a]ssessing confidentiality agreements for compliance … will continue to be a top priority for OWB into Fiscal Year 2016."
To read the SEC's 2015 report on the Whistleblower Program, click here.