On November 17, 2014, the U.S. Securities and Exchange Commission (“SEC”) issued its 2014 Annual Report to Congress on the Dodd-Frank Whistleblower Program. The Annual Report covered the SEC’s fiscal year 2014, which ended on September 30, 2014.
Fiscal year 2014 marked a record year for the SEC’s Whistleblower Program, in terms of both the number and dollar amount of whistleblower awards, and the number of whistleblower tips received. In 2014, the SEC authorized awards for nine whistleblowers, including a record payout in September 2014 of more than $30 million to a whistleblower overseas who had helped alert the SEC to what it described as an ongoing fraud. According to the report, the SEC also made additional payments to whistleblowers who received awards in other years because it has since been able to collect more money from a variety of enforcement actions.
The SEC received more than 3,600 tips from whistleblowers in fiscal year 2014, the largest number received since the Whistleblower Program went into effect three years ago. The most common complaint categories reported by whistleblowers to the SEC included Corporate Disclosures and Financials, Offering Fraud and Manipulation. The SEC received whistleblower submissions from individuals in all 50 states, as well as from the District of Columbia and the U.S. territory of Puerto Rico. California, Florida, New York and Texas were the top states from which the highest number of whistleblower tips originated in fiscal year 2014. Further, in fiscal year 2014, the SEC received whistleblower submissions from individuals in 60 foreign countries, with the majority of those coming from Britain, India, Canada, China and Australia.
The SEC Whistleblower Program provides for mandatory rewards to individuals who offer original information to the SEC that leads to an SEC enforcement action resulting in sanctions of more than $1 million. The award size to whistleblowers ranges from 10% to 30% of the amount collected by the SEC (and in related actions). The law also includes provisions to protect the anonymity of the whistleblower if represented by counsel, and provisions to safeguard whistleblowers from retaliation. The SEC awarded its first whistleblower under the program following its inception in fiscal year 2012. Since the program’s inception, the SEC has authorized awards to 14 whistleblowers.