SEC Supports and Protects Whistleblowers

Date Published:
SEC Supports and Protects Whistleblowers

SEC Supports and Protects Whistleblowers

The Securities and Exchange Commission (SEC) has made a conscious effort to support whistleblowers who report fraud. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, and an insider bounty program was put into place. The Act also contained anti-retaliation provisions. Forbes reports that the SEC has shown the program to be a success. More than $50 million in reward payments have been made to whistleblowers in the four years since the program has been in effect.

Whistleblowers from the United States and sixty foreign countries have submitted thousands of tips to the SEC’s Office of the Whistleblower since 2011. Seventeen whistleblowers have received awards totaling over $50 million. The commission has pursued companies that retaliated against their employees. Forbes reports that SEC Chair Mary Jo White called the SEC “the whistleblower’s advocate” in a recent speech.

SEC Chair White also emphasized how important the whistleblower information is and what a widespread impact it has had, stating that the tips “are of tremendous help to the [SEC] in stopping ongoing and imminent fraud, and lead to significant enforcement actions on a much faster timetable than we would be able to achieve without the information and assistance from the whistleblower.” She also stated that whistleblower program has “created a powerful incentive for companies to self-report wrongdoing to the SEC – companies now know that if they do not, we may hear about the conduct from someone else.”

The SEC’s commitment to supporting whistleblowers was demonstrated in its first retaliation case, which was filed against Paradigm Capital Management, Inc. The whistleblower was awarded the maximum 30 percent share of amount collected and received $600,000. The tipster alleged that he was demoted and had his job functions changed after reporting improper principal transactions to the SEC. The Commission stated in a press release that “[t]he whistleblower in this matter suffered unique hardships, including retaliation, as a result of reporting to the Commission.”

The Securities and Exchange Commission (SEC) has made a conscious effort to support whistleblowers who report fraud.