Consumer Fraud

SEC Whistleblower report shows substantial climb in number of tips, complaints received

osha whistle SEC Whistleblower report shows substantial climb in number of tips, complaints receivedThe number of complaints, tips, and reports of fraud and other wrongdoing received by the U.S. Securities and Exchange Commission’s (SEC) Office of the Whistleblower climbed eight percent in the past year, according to the 2013 Annual Report on the Dodd-Frank Whistleblower Program.

According to the SEC report, the agency received 3,238 complaints in fiscal year 2013, up from 3,001 in 2012. The SEC program, designed to combat financial fraud like that which fueled the financial meltdown of the late 2000s, encourages private individuals to alert federal regulators to securities law violations and financial crimes. By empowering private-sector employees to become watchdogs, the SEC is better equipped to police the financial market for crime.

Since it was established under Dodd-Frank in August 2011, the SEC’s Office of the Whistleblower has logged 6,573 tips and complaints.

Throughout the past year, the SEC office has paid $14.8 million to whistleblowers that helped regulators stop “ongoing frauds” and recover “substantial investor funds,” the agency said.

“In less than six months after receiving the whistleblower’s tip, the commission was able to bring an enforcement action against the perpetrators and secure investor monies,” the SEC said, adding that it “hopes that award payments will encourage individuals to come forward and assist the commission in stopping securities fraud.”

Under provisions of the 2010 Dodd-Frank Wall Street Reform & Consumer Protection Act, the SEC can award whistleblowers 10 to 30 percent of the total recovery they helped secure, in cases that result in sanctions of at least $1 million. The SEC’s whistleblower provisions are similar to those of the False Claims Act (FCA), which empowers and protects whistleblowers who report fraud that harms taxpayer-funded agencies and programs. The FCA has been modified and strengthened in recent years and has become one of the federal government’s most powerful weapons in the fight against rampant Medicare and Medicaid fraud.

The SEC’s latest whistleblower report demonstrates that the vast majority of tips and complaints come from the same states and foreign countries as they did last fiscal year, with California, New York, Florida and Texas leading. From overseas, the majority of whistleblower tips originated in China, India, Russia, the U.K. and Canada.


2013 Annual Report on the Dodd-Frank Whistleblower Program