Great Success (for now): The SEC Whistleblower Office’s 2016 Report Paints a Rosy Picture Despite Uncertainty on the Future of Dodd-Frank
By Ronny Valdes
On November 11, 2016, the SEC’s Office of the Whistleblower released its 2016 Annual Report to Congress. The report touts the great success the SEC’s Whistleblower Office has had since the whistleblower provisions went into effect with the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in 2010. The SEC reports recovery of over $584 million in financial sanctions based on tips from thirty-four whistleblowers since the program’s inception. These numbers demonstrate how effective the SEC program has been in strengthening the agency’s enforcement efforts and recouping money for affected investors.
The program has had such significant success in part because of the agency’s willingness to reward whistleblowers for providing timely and credible information and substantial assistance in rooting out frauds the agency might not otherwise uncover. In 2016 alone, the SEC’s Whistleblower Office issued over $57 million in whistleblower awards, an amount higher than all previous years combined. Overall, the agency has awarded over $111 million in awards to thirty-four whistleblowers. These numbers do not include an award of $20 million that the SEC announced on November 14th. Additional indications of the success of the program are the increasing volume and geographic diversity of whistleblower submissions. In 2016, the SEC’s Whistleblower Office received over 4,200 tips from individuals in 103 countries. Not to mention the notable actions the SEC pursued in 2016 against large companies including Anheuser-Busch, BlueLinx Holdings, and Merrill Lynch.
The future of the SEC Whistleblower Program was plunged into doubt with the victory of President-Elect Donald J. Trump and talk that the new Congress may pursue unraveling the Dodd-Frank Act. Proponents of the SEC Whistleblower program are hopeful that any repeal or change to Dodd-Frank will spare the SEC Whistleblower program because it is a powerful tool to combat fraud and has greatly benefitted investors. The continued enthusiasm of potential whistleblowers in providing tips coupled with the great success in whistleblower-related enforcement actions may be sufficient to convince the President-Elect and the incoming Congress that the program is worth keeping.
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