In a speech to whistleblower lawyers about the SEC’s Whistleblower Program, SEC Enforcement Director Andrew Ceresney praised the early success of the Whistleblower Program. He noted that since the inception of the program, whistleblower tips to the SEC have led to $500 million in sanctions, and the has paid over $107 million to 33 SEC whistleblowers. In addition, the Whistleblower Office has gained a global presence. The office has received more than 14,000 tips from whistleblowers in every state of the United States and from over 95 foreign countries.
Director Ceresney noted that whistleblower disclosures have been particularly invaluable in cases involving:
- Issuer Reporting and Disclosures;
- Offering Frauds and Ponzi Schemes; and
- Foreign Corrupt Practices Act.
In fiscal year 2015, the SEC brought 114 actions against 191 parties involving financial fraud. In total, about 18% of all SEC whistleblower disclosures received by the office related to issuer reporting and disclosures. The director stated that insiders are typically best suited to uncover this type of fraud as the investigations involve misconduct that is hard to spot and are very document-intensive.
Director Ceresney also stated that whistleblowers have aided the SEC in uncovering offing frauds and Ponzi schemes. Last fiscal year, approximately 16% of the tips received by the Whistleblower Office related to offering frauds. He noted that whistleblowers are able to help the SEC stop these investment frauds by providing timely advice about false and misleading statements in offering memoranda or marketing materials.
In addition, whistleblowers have helped the SEC with the enforcement of the Foreign Corrupt Practices Act. In fiscal year 2015, the Whistleblower Program received 186 tips relating to the FCPA. Director Ceresney underscored that international whistleblowers are able to add great value in these enforcement actions because it is difficult for the SEC to investigate overseas conduct. In fact, the program has already issued eight awards to whistleblowers living in foreign countries.
In one of his final remarks, the director stressed the importance of prompt reporting: “My general message to whistleblowers is to report as soon as you learn of misconduct as you never know whether someone else will report, whether the information will become stale or whether the statute of limitations will run.”
Furthermore, unreasonable delays in reporting can reduce the final award issued to a whistleblower. The director stated that 20% of awards made through 2015 were reduced because of such delays.
To learn more about the SEC Whistleblower Program, download Zuckerman Law’s eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award:
- See our column in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.
- See our column in Going Concern: Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever.
- See our post in Accounting Today: Whistleblower Protections and Incentives for Auditors and Accountants.
- See our article providing Tips for SEC Whistleblowers
- See our post in The Compliance and Ethics Blog: Shkreli Trial Reveals the Challenges Faced by Compliance Whistleblowers.
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