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SEC Releases Annual Report of Whistleblower Office: Another Record Year Affirms Tremendous Power of Agency’s Whistleblower Program

  • November 17, 2017

Labaton Sucharow LLP, which established the first national practice exclusively dedicated to representing Securities and Exchange Commission (SEC) whistleblowers, today applauded the SEC, which released its annual report of the whistleblower program affirming another record year for the agency’s program. Established under Dodd-Frank, the SEC program already has awarded more than $162 million to whistleblowers whose tips fueled enforcement actions resulting in approximately $1 billion in monetary sanctions.

“In crafting this investor protection initiative, we at the SEC believed that monetary incentives, employment protections, and the ability to report anonymously would create a revolutionary paradigm. Looking at the program’s results, it’s incredibly gratifying,” noted Jordan A. Thomas, Chair of Labaton Sucharow’s Whistleblower Representation Practice and a principal architect of the SEC Whistleblower Program.

This year, in one novel action underscoring that anyone can be a whistleblower, two analysts represented by Labaton Sucharow tipped the SEC to misconduct at Orthofix International, which settled with the SEC in January for more than $8 million. The whistleblowers could receive more than $2.5 million from the Commission. Thomas also represents whistleblowers in two of the SEC’s largest enforcement actions in recent years—a $415 million settlement with Merrill Lynch and a $267 million settlement with JP Morgan. The amount of those whistleblower awards has yet to be finally determined by the agency.

Key statistics from the FY 2017 Annual Report include:

  • In FY 2017 alone, the agency issued awards totaling nearly $50 million, with the highest award exceeding $20 million.
  • The SEC received more than 4,400 tips, an increase of nearly 50 percent since FY2012, the first full year of the program’s reporting.
  • California, New York, Texas, Florida, and New Jersey generated the highest number of whistleblower tips.
  • International submissions constituted approximately 12 percent of the year’s tips, with individuals in the United Kingdom, Canada, and Australia generating the highest number.
  • 62 percent of award recipients to date were current or former insiders of the company at issue, of which 83 percent reported their concerns internally first.
  • 28 percent of successful whistleblower actions involved defendants registered with the SEC, including broker-dealers, investment advisers, or other registered market participants.

“The government got it right with the whistleblower program,” Thomas continued. “Injured investors are being made whole, employees are taking a safer and active stake in their corporate culture, and bad actors are on notice. And I’d bet the coming year will break all prior records.”

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