The SEC 2016 Annual Report to Congress on the Dodd-Frank Whistleblower Program was published on November 15, 2016. This post highlights seven relevant aspects of the report.
Continuous increase in number of tips received by the SEC. The number of whistleblower tips the Commission receives annually continues to increase: 3,001 tips in the 2012 fiscal year, 3,238 tips in the 2013 fiscal year, 3,620 tips in the 2014 fiscal year, 3,923 tips in the 2015 fiscal year and 4,218 tips in fiscal year 2016. From fiscal year 2012, the first year for which we have full-year data, to fiscal year 2016, the number of whistleblower tips has grown more than 40 percent. Since August 2011, when the SEC’s Office of The Whistleblower was established, until the end of fiscal year 2016, a total of 18,334 tips from whistleblowers have been received.
Continuous increase in number of FCPA-related tips. The number of tips related to FCPA issues also continues to rise. In total, 239 tips received in the 2016 fiscal year were related to alleged FCPA violations. In fiscal year 2012, 2013, 2014, and 2015, the tips related to FCPA issues were 115, 149, 159, and 186 respectively.
Slightly decrease in tips from the Americas. The SEC is receiving numerous tips from abroad. The 2016 Annual Report indicates that, since the beginning of the whistleblower program, the Commission has received tips from 103 countries outside of the United States. In fiscal year 2016 alone, the SEC received tips from 67 foreign countries.
From the Americas (not including the United States and Canada, where most of the whistleblowers in the region reside), in fiscal year 2016, the SEC received 46 tips from 11 countries: Argentina (1), Bahamas (1), Brazil (7), Colombia (2), Costa Rica (1), Dominican Republic (1), Honduras (1), Jamaica (1), Mexico (29), Uruguay (1), Venezuela (1). It is not clear whether the tips from the Americas are related to FCPA or other securities issues.
In fiscal year 2015, the SEC received 48 tips from 12 countries: Argentina (1), Bahamas (1), Belize (1), Brazil (14), Chile (11), Ecuador (1), El Salvador (2), Honduras (1), Jamaica (1), Mexico (13), Panama (1), and Venezuela (1).
Continued high awards. In fiscal year 2016, the Commission awarded more than $ 57 million to 13 whistleblowers. In total, the SEC has issued more than $ 111 million in awards to 34 whistleblowers since the whistleblower program was established in August 2011. Six of the ten largest whistleblower awards were made by the Commission during 2016, including the second-highest award of over $22 million.
Award for bolstering ongoing investigation. Whistleblowers can receive an award not only when their tip initiates an investigation, but also when they provide new information or documentation that significantly contributes to an existing investigation. In fiscal year 2016, the Commission awarded a company employee whose tip bolstered an ongoing investigation with additional evidence of wrongdoing that strengthened the SEC’s case with $3.5 million.
Profile of whistleblower award recipients. The Annual Report also sheds some light, with aggregate information, on the profile of whistleblower awards recipients. According to the Annual Report, 65% of the individuals who receive awards are insiders of the entity on which they reported. 80% of the whistleblowers raised their concerns internally first before reporting their information to the Commission. Approximately 25% of the individuals who have received awards under the program submitted their information anonymously to the SEC through counsel. The award recipients are from different parts in the United States and eight of them were foreign nationals, including the recipient of the program’s highest award to date ($30 million). Finally, the Annual Report informs that award recipients have provided specific information, identifying individual transactions.
Review of restrictive agreements. The Annual Report highlights that during fiscal year 2016 one area of focus related to whether employers were using confidentiality, severance, and other kinds of agreements, or engaging in other practices, to interfere with an individual’s ability to report potential wrongdoing to the SEC. In fiscal year 2016, the Commission advanced its enforcement efforts in this area, bringing significant actions to protect whistleblowers.
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© 2016 FCPAméricas, LLC
Post authored by Carlos Henrique da Silva Ayres, FCPAméricas Contributor