The number of whistleblower reports to the SEC’s Office of the Whistleblower under the Dodd-Frank Act’s whistleblower provisions continues to increase, according to the agency’s latest annual report. The November 16, 2015 report, which is entitled “The 2015 Annual Report to Congress: Dodd-Frank Whistleblower Program,” and which can be found here, reports that the number of whistleblower reports to the agency has increased every year since the program was instituted in 2011. The agency has also made over $54 million in whistleblower awards since the program’s inception, including more than $37 million to eight whistleblowers in fiscal year 2015 alone.
According to the Report, there were 3,923 whistleblower reports to the agency in fiscal 2015 (which ended September 30, 2015), an increase of 303 (about 8.3%) over fiscal 2014. The number of whistleblower reports in fiscal 2015 was nearly 30% greater than the number in fiscal 2012, the first full year in which the program was in place. There have now been a total of 14,116 whistleblower reports to the agency since the program’s August 2011 inception. The whistleblower reports involved a wide range of activity, including corporate disclosures and reporting; offering fraud; manipulation; insider trading; and FCPA-related activity.
The agency received whistleblower reports from all 50 states. Since the program’s inception, the agency has received whistleblower reports from 95 different countries, including reports from 61 different foreign countries during fiscal year 2015. The countries with the largest number of whistleblower reports during 2015 were the United Kingdom (72), Canada (49), the People’s Republic of China (43), India (33), and Australia (29). Whistleblower reports from outside the U.S. represented about 10% of all reports to the agency during fiscal year 2015.
The eight whistleblower awards during fiscal 2015 for total payments of $34 million included the first award ever of 30% of the amount of the agency’s recovery (the largest percentage allowed under the Dodd-Frank Act) in what was the agency’s first anti-retaliation case. It is important to note that the whistleblower payments do not diminish the amount of the agency’s recoveries from wrongdoers. Rather, the amounts are drawn from an Investor Protection Fund that the Dodd-Frank Act created to fund whistleblower awards. At then end of the 2015 fiscal year, the balance of the Investor Protection Fund stood at just over $400 million. In other words, lots more whistleblower awards to come.
Since the beginning of the whistleblower program, awards have been made to 22 individuals in connection with 16 covered actions, as well as in connection with several related actions. Roughly one-half of the whistleblowers who have received awards under the program provided original information that caused Enforcement staff to open an investigation, while the other half received awards because their original information significantly contributed to an existing investigation. Of the award recipients who were current or former employees of their companies, approximately 80% raised their concerns internally to their supervisors or compliance personnel, or understood that their supervisor or relevant compliance personnel knew of the violations, before reporting their information of wrongdoing to the Commission. Approximately 20% of the awards made to date were reduced because of an unreasonable reporting delay. Several of the cases in which a whistleblower received an award concerned firms involved in the financial services industry, with some involving broker-dealers or financial advisers . A number of the award recipients reported information to the Commission concerning suspected Ponzi-like schemes