The U.S. Securities and Exchange Commission (SEC) has released its 2015 annual report to Congress on the Dodd-Frank Whistleblower Program.
While much of the whistleblower reward program is shrouded in secrecy, the report does shed some light, said Kathleen Clark, JD, professor of law at Washington University in St. Louis and a leading expert on legal ethics.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, if the SEC issues a sanction greater than $1 million as a result of a whistleblower’s tip, the whistleblower can receive between 10 and 30 percent of the sanction amount.
But many details of the program remain largely unknown to the public, Clark said.
“The Dodd-Frank statute requires the SEC to protect whistleblowers’ identity, so the agency redacts or censors almost all factual details from its publicly available orders under the program,” she said.
The new report does answer some questions, Clark said.
She pointed out a few of the highlights:
- The SEC has paid more than $54 million to 22 whistleblowers since the program began in 2011.
- Less than half of these whistleblowers were company insiders – current or former employees of the company that engaged in wrongdoing.
- Most (4 out of 5) insider whistleblowers raised concerns internally or believed that their supervisor or company compliance official knew of violation before going to the SEC.
- Non-insider whistleblowers include victimized investors and individuals with a “personal relationship with the alleged wrongdoer.”
- The SEC allows whistleblowers to submit information anonymously, and one-fifth of whistleblower award recipients took the anonymous route – which requires that they submit their information through a lawyer.
More on Clark’s thoughts about financial rewards for lawyers involved in whistleblower cases can be read in a July 2, 2015, story in Newsroom.
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