History of the SEC Whistleblower Law:
The SEC’s whistleblower program went into effect on July 21, 2010, when President Obama signed into law the “Dodd-Frank Wall Street Reform and Consumer Protection Act.”
According to the most recent SEC Whistleblower Office report, the number of whistleblower tips increased from 3,620 in FY 2014 to 3,923 in FY 2015. These tips came from whistleblowers in the US as well as from 61 foreign countries. The most common complaint categories reported by whistleblowers in FY 2015 were Corporate Disclosures and Financials, Offering Fraud, and Manipulation.
Eight whistleblowers received awards in FY 2015. The SEC also announced it had made the largest whistleblower award to date, awarding $30 million to one whistleblower. Further, the Office issued an award of 20% to two foreign nationals who reported information that led to an investigation and monetary recovery.
In FY 2015, the SEC also used for the first time its authority under the Dodd-Frank Act to bring enforcement action against a company for retaliation against a whistleblower.
On August 21, 2012, the Commission granted its first award to a whistleblower who provided documents and significant information to the SEC that ultimately led to the filing of an emergency action in federal court to prevent the defendants from further dissipating investor funds. The whistleblower’s tip led to court order sanctions totaling more than $1 million dollars. The whistleblower in this case received an award of 30%, the maximum percentage payout allowed under the law.
On October 1, 2013, the Commission made its largest award to date, awarding over $14 million to a whistleblower whose information led to enforcement action that recovered substantial investor funds. This recovery was not only notable for its amount, but also because enforcement was taken by the Commission just six months after the whistleblower submitted the tip.
On June 16, 2014, the Commission announced that for the first time in program history, they exercised authority under the Dodd-Frank Act to bring enforcement action against a company for retaliation against a whistleblower. The former head trader at Paradigm filed a whistleblower complaint with the SEC in March 2012 accusing Paradigm of engaging in prohibited principal transactions. Once aware that the head trader had filed a complaint with the SEC, Paradigm demoted the head trader, stripped him of all supervisory responsibilities, and otherwise sought to marginalize him.
On September 22, 2014 the Commission announced its largest award to date, a $30 million dollar award to a whistleblower who provided key information that led to a successful enforcement action. The latest award was the fourth to a whistleblower living in a foreign country and the fourteenth award in the programs history.