The U.S. Securities and Exchange Commission’s (SEC) Office of the Whistleblower this week released its annual report for 2015, showing that the agency received 4,000 tips this year — marking a 30 percent increase in whistleblower activity since 2012.
Since August 2011, when the SEC’s whistleblower program went into effect, the agency has awarded 22 whistleblowers more than $54 million. According to the SEC’s report, whistleblowers shared awards totaling more than $37 million in 2015 alone – nearly 70 percent of the total awards since the program started.
The SEC’s whistleblower program awards whistleblowers a percentage of any monetary sanction over $1 million in which their tips result. Awards range from 10 to 30 percent of the total penalty.
“Increased public awareness of the program also has led to a substantial growth in the number of whistleblower tips,” Office of the Whistleblower Chief Sean McKessy says in the report, adding that “the number of whistleblower tips received by the Commission has increased each year of the program’s operation.”
Mr. McKessy said that in addition to awarding whistleblowers who provide original, valuable tips that help regulators stop financial fraud, the agency has taken steps to protect whistleblowers from retaliation.
The Office of the Whistleblower “is actively involved with Enforcement staff in helping to ensure that individuals feel secure in reporting wrongdoing to the Commission, without fear of reprisal from their employers,” Mr. McKessy wrote. “During Fiscal Year 2015, the Commission took several important actions aimed at protecting whistleblowers from unlawful retaliation by their employers or attempts to interfere with their ability to report to, and cooperate with, the agency.”
These anti-retaliation steps included reviewing confidentiality agreements employees sign as a condition of employment that restrict or impede their ability to report wrongdoing to the SEC.
In one case, the SEC charged a company with violating federal rules for using confidentiality agreements that prohibited employees from discussing the details of interviews given during the course of internal investigations without the approval of the company’s legal department.
The SEC also worked to clarify rules stating that whistleblower retaliation protections provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act” or “Dodd-Frank”) apply not only to individuals who report wrongdoing to the SEC but also to employees who report securities law violations internally to their employers.”
The SEC said it clarified the rule after several courts “narrowly interpreted” the provisions and limited protection only to those individuals who report to the Commission. The agency said it also filed numerous amicus curiae briefs on this issue in federal district and appeals court matters.
“We want whistleblowers—and their employers—to know that employees are free to come forward without fear of reprisals,” SEC Chair Mary Jo White said.