In its first full year of implementation, the whistleblower incentive program established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) resulted in 3,001 whistleblower tips filed with the Securities and Exchange Commission (SEC), but only one award so far. Under the whistleblower incentive program, individuals who report original information that leads the SEC to recover monetary sanctions of $1 million or more are eligible to receive awards of 10 to 30% of that financial recovery. The SEC’s 2012 Annual Report (pdf) on this whistleblower program summarizes the agency’s experience with the program during the 2012 fiscal year, the types of tips received, and the SEC’s enforcement efforts. Key findings of the report include the following:
- The 3,001 tips, complaints, and referrals the SEC received in 2012 came from whistleblowers located in all 50 states, the District of Columbia, the U.S. territory of Puerto Rico, as well as 49 foreign countries.
- The most common whistleblower complaints involved corporate disclosures and financials (18.2%), offering fraud (15.5%), and manipulation (15.2%).
- Of the whistleblower tips, complaints, and referrals the SEC received, 143 resulted in enforcement judgments and orders that potentially qualify the whistleblower to receive funds under the program.
- On August 21, 2012, the SEC issued its first award under the new program to an individual whose tip assisted the SEC in stopping an ongoing fraud scheme. The court in this case ordered the fraud perpetrators to pay more than $1 million in sanctions. During the 2012 fiscal year, approximately $150,000 of this amount was collected, giving the whistleblower an award of about $50,000.
In a press release, SEC Chairman Mary L. Schapiro said: "the whistleblower program already has proven to be a valuable tool in helping us ferret out financial fraud," adding, "When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources."
Other Whistleblower Efforts
Whistleblower protection has been – and will likely continue to be – a legislative and regulatory priority for this administration. Last week, the Senate approved the Whistleblower Protection Enhancement Act (WPEA) of 2012 (S. 743), a measure that strengthens whistleblower protections for federal employees. Because the House of Representatives approved this bill in September, it now passes to the President for his signature.
Earlier this year, the Department of Justice (DOJ) announced the creation of a new position of Whistleblower Ombudsperson within the DOJ’s Office of the Inspector General (OIG), and the Occupational Safety and Health Administration (OSHA) launched an alternative dispute resolution pilot program for resolving whistleblower complaints filed with the agency.
Moreover, several private-sector whistleblower bills were introduced in recent months, including one that would extend whistleblower protections to employees who provide information to the DOJ regarding criminal antitrust violations, and others that would expand and strengthen whistleblower protections in the private sector. In addition to these standalone bills, lawmakers introduced other legislation this term, including the Robert C. Byrd Mine and Workplace Safety and Health Act of 2012, that incorporates anti-retaliation provisions applicable to whistleblowers. Now that the President has been reelected, it is likely that one or more of these bills will be reintroduced in the 113th Congress, and whistleblower protection initiatives and programs will continue.