Whistleblowers Without Borders: International Whistleblowers are Increasingly Important Contributors of Tips to the SEC Whistleblower Reward Program
On March 4, 2021, the SEC announced an award of over $5 million to joint foreign whistleblowers whose tip, providing significant information about misconduct abroad, caused the opening of an investigation that resulted in a successful SEC enforcement action.
According to Jane Norberg, former Chief of the SEC’s Office of the Whistleblower, “The whistleblowers’ information alerted the staff to misconduct occurring abroad which could have been difficult to detect without their tip.” Norberg used this opportunity to recruit more international whistleblowers to contribute to the SEC whistleblower program, noting that “[w]histleblowers from 130 different countries have provided tips to the Commission since the beginning of the program, and we hope this award encourages others with credible information to come forward.”
These two international SEC whistleblowers are the latest example of the increasing global reach of the SEC whistleblower reward programs. As awareness of the SEC program and its success has grown internationally, so too has the knowledge that foreign whistleblowers, not only those located in the U.S., are eligible to serve as whistleblowers and submit confidential, anonymous tips under the SEC whistleblower reward program.
The SEC captures and reports data on the profile of the whistleblowers submitting tips to and receiving awards under its program, including their geographic origin. As highlighted below, our review of this data confirms a rise in both the number of international whistleblowers submitting tips to the SEC program and receiving monetary awards.
International Whistleblowers & the SEC Whistleblower Reward Program
From the inception of its whistleblower program over ten years ago to the present, the U.S. Securities and Exchange Commission (SEC), whose whistleblower reward program encourages those with knowledge of violations of U.S. securities laws or bribery of foreign government officials to share this information with the Commission, has awarded approximately $928 million to 166 whistleblowers. Aided by the information those 166 meritorious whistleblowers provided, the SEC, in turn, has opened investigations and taken successful enforcement actions that have led to over $3.1 billion in monetary sanctions.
While it is difficult to determine concretely how much international whistleblowers have contributed to this success over the past nine months, the data the SEC has collected from the inception of the program through September 30, 2020, shows they are playing an increasingly important role. In its 2020 Annual Report to Congress on the SEC Whistleblower Program, the SEC noted that, of the 106 total whistleblowers who had received awards, 19 (or 18%) were foreign whistleblowers. Because this report only captures data for Fiscal Year 2020, which ended on September 30, 2020, we will have to wait until later this fall when the SEC issues its report for Fiscal Year 2021 to learn how many foreign whistleblowers, in addition to the two mentioned in the March 2021 SEC press release described above, have received awards between October 1, 2020 and present. Although the 2020 Annual Report does not record the size of the 19 awards, an SEC press release from 2014 describes an award of $30 million paid to a “whistleblower living in a foreign country,” which is likely to be one of the largest to an international whistleblower.
In addition to the meritorious whistleblowers who receive rewards, the SEC also tracks in its annual reports to Congress on the performance of its Whistleblower Program the geographic origin of individuals submitting tips to the SEC whistleblower program. Listed in the table below are the six countries outside the U.S. who have contributed the most tips to the SEC’s whistleblower reward program over the eight years that the SEC has tracked this data.
In an increasingly globalized economy, wrongdoing that occurs overseas will frequently reverberate and have an impact on U.S. investors. As the Libor and FX manipulation scandals demonstrate, which largely took place in traders’ chat rooms throughout European banks, international whistleblowers are frequently best placed to expose such wrongdoing. In its 2020 Annual Report to Congress, former SEC Whistleblower Office Chief Jane Norberg noted that among the whistleblowers awarded in the fiscal year 2020 included “foreign nationals who shone a light on hard to detect fraud happening abroad but impacting U.S. investors and the marketplace.” As the above numbers show, the SEC has been successful in attracting an increasing number of international whistleblowers to its program. If this trend follows on the current trajectory, this citizen army of international watchdogs is only going to grow.
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