A Powerful Partnership in Full Swing: SEC Issues First Award to Whistleblower

Yesterday, just one year after the final rules of the SEC Whistleblower Program became effective, the agency has issued its first whistleblower award. This is a pivotal moment for prospective whistleblowers, investors and the public at large. There are several remarkable points to note about this first award. First, the timing of this award underscores that whistleblowers do indeed expedite and empower the enforcement process. In my August 14 post (“The Mechanics of a Whistleblower Submission: Recent Guidance from the SEC”), I cite the SEC Annual Report from FY 2011, which states that only 61% of SEC enforcement actions were filed within two years of opening an MUI, or matter under inquiry. Second, the SEC awarded the maximum percentage – 30% of sanctions collected – to the whistleblower highlights not only the SEC’s real commitment to the program, but also the whistleblower’s commitment to meaningfully participate in the investigative process. Finally, the issuance of an award so quickly emphasizes that the program is off to a banner – and credible — start. By way of example, though the new IRS whistleblower program was enacted by Congress in 2006, only three awards have reportedly been paid to whistleblowers–and only in the last year. This isn’t a surprise, the strong employment protections offered by the SEC Whistleblower Program – and the fact that whistleblowers can report wrongdoing anonymously by working with a whistleblower attorney – establish a revolutionary and strong platform for individuals to do the right thing.

This award crystallizes an important truth: The partnership between individual citizens and their government can be powerful. Having played a leadership role in the development of the Whistleblower Program during my tenure at the SEC, this is an event I have been looking forward to. I expect that this historic event will embolden more whistleblowers to break their silence and work with law enforcement authorities to put an end to the serial misconduct that has so eroded investors faith in our markets.

Named one of the top whistleblower practices/attorneys in the country by The New York Times, Wall Street Journal, NPR and The New Yorker
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