The SEC just released its 2014 Dodd-Frank Whistleblower Program report reflecting a record year in both the rewards it has paid and the tips it has received. The SEC issued whistleblower awards to more people in 2014 than in all previous years combined. And the SEC received more than 3,500 tips from whistleblowers, up by 20% from the previous couple of years. It received tips from every state and from outside the United States, with the bulk of those coming from Britain, India, Canada, China and Australia.
The report detailed the nine whistleblower awards it made this year, highlighting the largest reward it has ever made – $30 million to a foreign whistleblower who provided key original information on an ongoing fraud that the SEC said would otherwise have been very difficult to detect. The SEC said “we hope that awards like this one will incentivize company and industry insiders, or others who may have knowledge of possible federal securities law violations, both in the U.S. and abroad, to come forward and report their information….”
In addition to the rewards in 2014, the SEC noted that “significant” payments were made to whistleblowers who received awards in prior years because the SEC was able to collect additional money from its enforcement actions. For instance, one whistleblower’s award went from an initial $50,000 to more than $385,000.
The SEC also noted the importance of companies developing internal compliance programs, stressing that they must “act upon credible allegations of potential wrongdoing when voiced by their employees.” In one case, the SEC said that the whistleblower worked aggressively internally to bring the securities law violations to the attention of the company and only went to the SEC after the company failed to take corrective action.
The report also emphasized the SEC’s work in supporting anti-retaliation protections by filing amicus curiae briefs in several private cases to address the scope of Dodd-Frank’s anti-retaliation employment protections. The SEC argued that the anti-retaliation protections should be “understood to protect individuals at publicly-traded companies from employment retaliation who internally report potential securities law violations.”
Last year, we reported that the SEC’s 2013 report was sunny and this year’s report is even sunnier. Here’s hoping the trend continues and that 2015 outshines them both.
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