On November 15, 2019, the SEC published its annual report to Congress covering the agency’s whistleblower program.
The report, which covers the period of October 1, 2018 through September 30, 2019, was prepared by the SEC’s Office of the Whistleblower (“OWB”) to summarize its whistleblower bounty program, report on recent statistical trends, and revisit key amendments to the SEC’s Dodd-Frank regulations that were first introduced in June 2018.
Whistleblower Bounty Program
The statistics provided in the SEC’s report suggest that the whistleblower program slightly contracted in FY 2019, compared to the previous year. OWB received a total of 5,212 whistleblower tips in FY 2019, 70 fewer than were received in the record-setting FY 2018. This total still represents an approximately 74% increase in tips received since the SEC started tracking statistics for the whistleblower bounty initiative in 2012.
The SEC reports that in FY 2019 approximately $60 million was distributed to 8 individuals whose initial tips and subsequent cooperation aided in the execution of successful enforcement actions. The SEC’s March 2019 $50 million award to two whistleblowers included a $37 million bounty to one of the individuals – the SEC’s third largest single award since the program’s inception.
For FY 2019, the SEC reports that the most common activities reported by whistleblowers related to corporate disclosures and financials (21%), offering fraud (13%) and manipulation (10%).
Proposed Rule Amendments
The SEC proposed amendments to its regulations to cope with the volume of tips it receives on an annual basis. Specifically, these amendments (the full text of which can be found here) seek to bar whistleblowers who repeatedly make frivolous claims and afford OWB additional discretion in making bounty determinations. Moving into FY 2020, the SEC will continue to consider the public comments received on these proposed amendments, which were originally introduced in June 2018. The SEC expects to adopt these proposed rules sometime in the coming year.