SEC updates whistleblowers progress

In some ways, we're living in Golden Era of whistleblowing, a bane to corporate executive and an increasingly strong temptation to employees thinking about rolling the dice.

While the biggest whistleblower awards seem to have been occurred via the False Claims Act, there are many whistleblower programs, notably programs mandated by Sarbanes-Oxley and Dodd-Frank. The latter has sparked lots of concern in the financial services industry especially; executives tend to feel that the incentives are too great for employees, whom they would rather approach management first.

According to Dodd-Frank, the SEC can pay awards to whistleblowers who provide high-quality, original information about securities law violations that result in a successful SEC enforcement action with more than $1 million in sanctions. The SEC is authorized to pay the whistleblower 10 to 30 percent of the sanctions collected.

Dodd-Frank requires the SEC to issue periodic updates on the program, something it did this month (though some would like even more information). The agency received more than 3,000 tips over the past year, from all 50 states. Some highlights include:

• The most common complaints related to corporate disclosures and financials (18.2 percent), offering fraud (15.5 percent), and manipulation (15.2 percent).
• There were 143 enforcement judgments and orders issued during the year that potentially qualify as eligible for a whistleblower award.
• The SEC made its first award under the new program to a whistleblower who helped the SEC stop an ongoing multi-million dollar fraud. The whistleblower received an award of 30 percent of the amount collected in the SEC's enforcement action, the maximum percentage payout allowed.

So far, there hasn't been any real blockbuster award that resulted from a Dodd-Frank whistleblower claim. The really big awards have all come from the False Claims Act. -Jim