SEC Office of the Whistleblower
The U.S. Securities and Exchange Commission (SEC) whistleblower program went into effect on July 21, 2010, when the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act.
[2][3] The SEC Whistleblower Program rewards people who submit tips related to violations of the federal securities laws.
[4] The program offers robust employment protections, monetary awards and the ability to report anonymously.
[5] SEC whistleblowers are entitled to awards ranging from 10 to 30 percent of the monetary sanctions collected, which are paid from a replenishing Investor Protection Fund.
[11] Following the financial crisis and the Madoff investment scandal, in July 2010, the SEC's bounty program was significantly enhanced after the President signed Dodd-Frank into law.
[16] The states that yielded the highest number of tips in Fiscal Year 2017 were California, New York, Texas, Florida, and New Jersey.
[16] The countries that yielded the highest number of tips in Fiscal Year 2017 were Canada, the United Kingdom, and Australia.
The whistleblower received $50,000, which represented 30 percent of the amount the Commission had collected at the end of the fiscal year.
When internal compliance systems fail, the monetary awards the program offers appropriately incentivize whistleblowers to continue their efforts to expose the wrongdoing by reporting directly to the SEC.
According to Jane Norberg, chief of the SEC Office of the Whistleblower, the joint whistleblowers played a critical role in alerting SEC staff to violations involving "highly complex transactions," and helping the agency recover tens of millions of dollars for investors.
[34] "We are likely to see more awards at a faster pace now that the program has been up and running and the tips we have gotten are leading to successful cases," McKessy told the Wall Street Journal in June 2013.
[35] Sean McKessy left the agency in July 2016 after serving for five years and later joined a whistleblower law firm.
[36][37] He followed in the footsteps of Jordan A. Thomas, a former Assistant Director in the Enforcement Division, who had a leadership role in the development of the SEC Whistleblower Program.
The motion claims that the SEC whistleblowers office had been negligent in a case originally posted as available for reward in 2012.
The motion goes on to state that the anonymous petitioner applied for the reward in October 2012 and three years later there had been no preliminary determination made in the case USCA #15-1444.
[47] The Investor Protection Fund was established in the fourth quarter of fiscal year 2010 to be available to the U.S. Securities and Exchange Commission, without further appropriation or fiscal year limitation for paying awards to whistleblowers and funding the work activities of Office of Inspector General’s employee suggestion program.
[11] The SEC is required to annually request and obtain apportionments from the Office of Management and Budget to use these funds.
[48][49] If the Investor Protection Fund balance drops below $300 million, Enforcement will replenish it by identifying qualifying receipts for deposit.
The office conducts quarterly conference calls with investigative staff to reconcile items that are tracked, with work that is assigned and resourced, and to discuss the quality of each whistleblower complaint.
The Office of the Whistleblower posts a Notice of Covered Action on its website for cases that result in monetary sanctions over $1 million.
[11][48] Whistleblowers receive their awards from the Securities and Exchange Commission Investor Protection Fund, established pursuant to Section 922 of the Dodd-Frank Act.
[11] After the final order has been issued, if a whistleblower has gotten an award that falls between 10 and 30 percent of the monetary sanctions collected in the action, the process is complete and the amount is not subject to appeal.
Payments from the IPF are made through the SEC's Office of Financial Management and are based on amounts that were collected from each individual case.
Section 21F directs the SEC to make monetary awards to eligible individuals who voluntarily provide original information that leads to successful SEC enforcement actions resulting in the imposition of monetary sanctions over $1 million, and certain related successful actions.
In addition, Section 924(d) of Dodd-Frank directed the SEC to establish a separate office within the Commission to administer the whistleblower program.
