SEC Issues First Whistleblower Report—Results Are Mixed

Ed. Note-today we have a guest post from Russ Berland, who gives a report on the SEC’s first whistleblower report. 

Those within the compliance and regulatory arena have eagerly awaited the SEC’s first whistleblower report. The report, issued last week, offers mixed results for the program and foreshadows the future utilization and effectiveness of the program. The most significant facts in the report are that no money has yet been paid to whistleblowers under the Dodd-Frank Act and in seven weeks, the SEC fielded 334 submissions from whistleblowers.

In February 2011, the SEC created the Office of the Whistleblower. The creation of the Office was precipitated by the Dodd-Frank Act, specifically Section 924(d) of the Act. The Proposed Rules for Implementing the Whistleblower Provisions specified under Regulation 21F became effective on August 12, 2011. In general terms, the whistleblower provisions allow whistleblowers to collect up to 30 percent of levied fines for bringing tips or evidence of fraud or other irregularities to the attention of the SEC.

The report provides only seven weeks of data because the rules became effective on August 12, 2011, and the SEC’s fiscal year ends on September 30. Highlights of the report include:

• Since the program’s inception, the Office has received 334 tips and fielded 900 calls from consumers;
• The most common complaint categories were market manipulation (16.2 percent), corporate disclosures and financial statements (15.3 percent), and offering fraud (15.6 percent);
• Some of the tips came from outside the United States; and
• While the SEC has already posted 191 matters that meet the requirements to be eligible under the program, because of timing requirements no whistleblower awards were paid under the program in fiscal year 2011. That likely will change in 2012.

A copy of the complete report is available here.

Russ Berland is Of Counsel at the law firm of Stinson Morrison Hecker LLP and can be reached at via phone at 816.691.3180 and via email at rberland@stinson.com. 

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IT’S NOT TOO LATE TO SEE THE BRIBERY ACT GUYS

On December 7, myself, Mike Volkov and the Bribery Act guys, Richard Kovalevsky QC and Barry Vitou will be making their only US appearance this year. Mike and I will review some of the more significant enforcement matters of 2011 and discussion lessons which may be drawn from them. Richard and Barry will discuss the Bribery Act. Best of all the event is free and CLE will be provided. Event details and registration are found at http://events.r20.constantcontact.com/register/event?llr=myqi4pcab&oeidk=a07e55t5re06e78f1e3. I hope you can make it!

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