SEC’s Whistleblower program going strong

Photo courtesy of Steven Depolo on Flickr

Photo courtesy of Steven Depolo on Flickr

Rob Swystun, Pristine Advisers

In its third year, the Securities and Exchange Commission’s Whistleblower Office is really hitting its stride.

But don’t take my word for it, take the word of Labaton Sucharow’s partner and Chair of the Whistleblower Representation Practice, Jordan Thomas, who recently spoke with Forbes contributor Walter Pavlo after the SEC released its Annual Report of the Whistleblower Office, created as part of the Dodd-Frank Act.

“These results tell me that after its third year that the whistleblower program is hitting its stride,” Thomas said in an interview with Pavlo. “There is more awareness of the program and we believe it is much more effective, which is consistent with what we found in our own survey.”

Part of that effectiveness is getting things done quickly. While actions by the SEC can take from two to four years, Thomas says, the largest award the SEC gave out last year originated from a tip received through its whistleblower program and it closed swiftly within a six-month period.

“This shows the effectiveness of the program,” Thomas says. “These tips are specific, some that I know of have included tapes of high level executives and actual documentation of misconduct.”

Most of the money paid out by the SEC came from one large settlement, but nevertheless, Thomas predicts the number of tips will pick up.

“This is the first part of the tidal wave of cases coming as a result of whistleblowers,” Thomas says.

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We interrupt this blog post to bring you the highlights of the SEC’s Third Annual Report of the Whistleblower Office
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  • over $14 million paid out to whistleblowers as a result of tips
  • over $439 million in funding available to pay whistleblowers for tips
  • 3,238 formal tips received in 2013 (up 8% from 2012)
  • “Corporate Disclosures and Financials” was the most common complaint by category, making up 17.2% of tips
  • the U.K. led in submissions of most tips from outside the U.S., followed closely by Canada and China
  • International submissions were up 18%
  • there was a 12% increase in countries that submitted tips

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And now back to your regularly scheduled blog post.
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The Whistleblower Program fits in nicely with the SEC’s renewed focus on accounting frauds, financial statement frauds and reporting frauds, as outlined by SEC chairwoman Mary Jo White, who spoke at the Bloomberg Markets 50 Summit.

Although the SEC has been dealing with Ponzi Schemes, insider trading and bank misconduct a lot over the past several years, the fact that “Corporate Disclosures and Financials” was the most common complaint by category, making up 17.2% of tips, shows that there is still work to be done in that area in the post Sarbanes-Oxley world.

What’s being done to protect whistleblowers

The SEC’s report also outlined how the organization aims to protect whistleblowers.

“Office of the Whistleblower is coordinating actively with Enforcement Divisions staff to identify matters where employers may have taken retaliatory measures against individuals who reported potential securities law violations or have utilized confidentiality, severance, or other agreements in an effort to prohibit their employees from voicing concerns about potential wrongdoing.”

Clearly the message here is that whistleblowers shouldn’t be afraid to come forward. The SEC’s got your back. And clearly it was included in the report to increase the likelihood of potential whistleblowers from coming forward.

If you see a foul happening at your place of work, don’t be afraid to take a deep breath and blow that whistle.

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One response to “SEC’s Whistleblower program going strong

  1. Pingback: SEC takes aim at fraudulent financial reporting again |·

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