SEC’s Whistleblower Annual Report

Dodd-Frank added Exchange Act Section 21F(g)(5) and requires that SEC's Office of the Whistleblower to report to Congress annually on the whistleblower program. It's due each October 30. I'm sure the SEC wanted to be in compliance, so they released the first annual report on the Dodd-Frank Whistleblower program (.pdf).

Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act added Section 21F to the Exchange Act and directs the Commission to make monetary awards to eligible individuals who voluntarily provide original information that leads to successful SEC enforcement actions resulting in monetary sanctions over $1,000,000. Awards are required to be made in the amount of 10% to 30% of the monetary sanctions collected and be paid from the SEC's Investor Protection Fund.

However, the final whistleblower rules became effective on August 12, leaving only 7 weeks of data under the new program for this report, running to September 30.

Vanessa Schoenthaler notes that "during the seven weeks for which data is available, the Commission received 334 whistleblower tips. Among these, the most common complaints related to market manipulation (54), offering fraud (52) and corporate disclosures and financial statements (51). These tips were categorized by the whistleblowers themselves, not the Commission, and there are 84 that were submitted under the category of "other" or without a category at all, so it's hard to say how accurate this information really is."

The whistleblower was able to designate a location, with 37 states and 11 foreign countries in the mix. Although, almost 1/4 left the location blank. The most popular: China, California, Florida, Maryland, New York, and Texas.

The seven weeks of data shows over 20 tips per week coming in on Form TCR.  What will be more interesting is how many of this filings turn into meaningful investigations and how many are unfounded claims from disgruntled employees trying to get back at their company.


For additional commentary on developments in compliance and ethics, visit Compliance Building, a blog hosted by Doug Cornelius.

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