SEC Releases Annual Report on the SEC Whistleblower Program: First Full-Year Analysis Reveals Positive Growth

Yesterday, the SEC released its annual report to Congress on the SEC Whistleblower Program, the first full-year analysis of the program since its enactment by the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the report, the SEC received 3001 tips, complaints and referrals from whistleblowers in all 50 states, the District of Columbia, and the U.S. territory of Puerto Rico as well as 49 foreign countries. The most common complaints were related to corporate disclosures and financials (18.2%), offering fraud (15.5%), and market manipulation (15.2%). Of the 735 enforcement brought by the SEC during the fiscal year, 143 (19.5%) involved monetary sanctions that exceeded the program’s statutory minimum threshold of $1 million. As of September 30, 2012, the balance of the replenishing Investor Protection Fund, from which SEC whistleblower awards will be paid, was over $453 million.

The report is full of interesting information, including:

The SEC continues to tout the high-quality of the whistleblower tips that it has received. “In just its first year, the whistleblower program already has proven to be a valuable tool in helping us ferret out financial fraud,” said SEC Chairman Mary L. Schapiro.
The SEC received 17% more whistleblower submissions than it did last fiscal year. For more information on last year’s SEC Whistleblower Program report, please click here.
The top five states in which whistleblower submissions were received were: 1) California; 2) New York; 3) Florida; 4) Texas; and 5) New Jersey and Washington. Surprisingly, California represented 14.5% of all whistleblower submissions worldwide and made 43% more than the financial capital of the world, New York state.
10.8% of whistleblower submissions were received from whistleblower living abroad. The top five countries in which whistleblower submissions were received were: 1) United Kingdom; 2) Canada; 3) India; 4) China; and 5) Australia. Interestingly, whistleblowers in the United Kingdom filed 22.8% of all whistleblower submissions and made 62% more than the next highest country.
The report provides more information about the valuable contributions made by the anonymous whistleblower that received the program’s first monetary award.

Having played a leadership role at the SEC in its development, I am pleased with the continued strong growth of the SEC Whistleblower Program and its potential to protect investors. In the coming years, based upon my experience with whistleblowers at the SEC and in private practice, I believe that many of the SEC’s most significant cases will be the result of courageous whistleblowers. Stay tuned.

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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