In November, the SEC Office of the Whistleblower (“OWB”) released its 2013 Annual Report on the Dodd-Frank Whistleblower Program (the “Report”). The Report details the number of whistleblower tips and complaints received and the amount of whistleblower awards made during fiscal year 2013.
Whistleblower Complaints and Tips FY 2013
According to the Report, the SEC received 3,238 whistleblower tips and complaints for fiscal year 2013 — an increase of 237 over the previous year. Six major allegation categories made up approximately 66% of the whistleblower tips and complaints:
· 17.2% alleged corporate disclosures and financials violations;
· 17.1% alleged offering fraud;
· 16.2% alleged market manipulation;
· 6.0% alleged insider trading;
· 5.2% alleged trading and pricing violations; and
· 4.6% alleged FCPA violations.
The remaining 34% is made up by a combination of the three remaining allegation categories (municipal securities and public pension, unregistered offerings, and market events), along with whistleblower tips and complaints that did not fit any of the nine allegation categories.
The increase in tips and complaints has led the SEC to reiterate protections for whistleblowers. In the Report, Sean McKessy, chief of the Office of the Whistleblower, states, “OWB is coordinating actively with Enforcement Division staff to identify matters where employers may have taken retaliatory measures against individuals who reported potential securities law violations or have utilized confidentiality, severance, or other agreements in an effort to prohibit their employees from voicing concerns about potential wrongdoing.”
Whistleblower Awards FY 2013
According to the Report, four whistleblowers received award payouts totaling approximately $14.8 million in fiscal year 2013. McKessy states, “Fiscal Year 2013 was a historic one …. [T]he Office paid whistleblowers a total of over $14 million in recognition of their contributions to the success of enforcement actions pursuant to which ongoing frauds were stopped in their tracks.” This is a big leap from the approximately $46,000 paid out in 2012.
The SEC’s whistleblower program has continued to make huge strides since its inception in 2011. The amount of awards paid out in 2013 will only help the program continue to grow. Companies should have internal policies and procedures to handle whistleblower complaints.