SEC Officials Provide Promising Reports on the SEC Whistleblower Program

Jordan Thomas - Tuesday, April 08, 2014
One of the questions I’m most frequently asked by clients, other lawyers and friends is “what’s happening inside the SEC with respect to the whistleblower program?” Recently, several top SEC officials have provided insight onto this question – and their comments indicate that the SEC continues to see the SEC Whistleblower Program as a powerful tool for combating securities fraud.

For example, at the recent “SEC Speaks” conference in Washington, D.C. the Chief of the SEC’s Foreign Corrupt Practices Act (“FCPA”) unit, Kara Brockmeyer, indicated that whistleblowing tips are now one of the leading ways in which the SEC learns of potential FCPA violations. Likewise, Jina Choi, the Regional Director of the SEC’s San Francisco office, described the SEC Whistleblower Program as “huge” and praised its contribution to the Commission’s ability to detect securities fraud. These remarks echo similar comments by other SEC leaders, including Stephen Cohen, the SEC’s Associate Director of the Division of Enforcement, with whom I spoke on a panel last June. Cohen reported that he is personally “participating in numerous cases where we are working very closely with whistleblowers” and that the whistleblower program has “clearly turbocharged” the Division’s enforcement efforts. Indeed, according to the SEC’s most recent annual report on the Whistleblower Program, the agency received more than 3,000 tips from around the world in 2013, which Cohen predicts will lead to “incredibly impactful cases.”

Brockmeyer, Choi and Cohen’s remarks certainly ring true in light of my own experience representing SEC whistleblowers: not only is our firm seeing cases involving major frauds, but also cases involving senior-level employees with timely, original and actionable intelligence about possible violations. Given that enforcement officials at the SEC continue to enthusiastically welcome whistleblower tips – and that the SEC has already paid one extremely significant award of $14 million as well as several other smaller awards – I predict that more major awards will be coming in the months ahead, as the SEC begins to resolve open investigations driven by whistleblowing. These investigations may take time, but ultimately I believe that’s a good thing for both investors and whistleblowers, since it will allow the SEC to properly investigate every tip and build strong cases against those who violate the securities laws and threaten the integrity of our markets.
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Website Editor &
SEC Whistleblower Advocate

Jordan A. Thomas jthomas@labaton.com

212-907-0836

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