The SEC Whistleblower Award Program Has Had A Tremendous Impact

SEC Chair Testifies Before Congress About The SEC Whistleblower Award Program

On June 14, 2016, the SEC Chair testified before the U.S. Senate’s Committee on Banking, Housing, and Urban Affairs.  During her testimony, the Chair discussed the success of the SEC whistleblower award program.

The Transformative Impact Of The SEC Whistleblower Award Program

SEC whistleblower award program The SEC Chair described the SEC whistleblower award program as having “a transformative impact” on the SEC’s enforcement of the securities laws. According to the Chair, the SEC received nearly 4,000 whistleblower tips in fiscal year 2015.  She testified that the number of tips that the SEC receives has increased every year since the SEC whistleblower award program began. During fiscal year 2015, the SEC whistleblower program paid more than $37 million in SEC whistleblower awards.  Since the SEC whistleblower award program began, it has given out more than $50 million in SEC whistleblower rewards (as of June 2016).

Enforcing SEC Whistleblower Protections

The Chair also informed the Committee that the SEC has been actively enforcing SEC whistleblower protections.  She noted that the SEC has brought its own “actions against firms for whistleblower retaliation and improper restrictions of whistleblowing activity in confidentiality agreements.”  Retaliating against SEC whistleblowers or impeding them from communicating with the SEC is against the SEC whistleblower rules.

Types Of SEC Whistleblower Cases

Another area that the Chair testified about involved what she called “key areas of misconduct”.  The types of misconduct that she identified could form the basis for future SEC whistleblower cases.  Some of the kinds of securities frauds and violations that the Chair identified involved:
  • financial reporting and issuer disclosure,
  • investment management,
  • private equity fees, expenses, and breaches of fiduciary duties,
  • performance advertising,
  • undisclosed conflicts of interest,
    SEC whistleblower award program

                           Transcript of the SEC Chair’s Testimony

  • compliance issues,
  • high frequency trading,
  • dark pools,
  • manipulative trading, and
  • misusing confidential customer trading information.

Additional Information

For more information about the SEC Chair’s testimony about the SEC whistleblower award program and other subjects, click on the links below:
    • The SEC Chair’s testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.  (External link to the SEC’s website.)
    • Article about the SEC Chair’s Congressional testimony.  (Note:  external link to The Pickholz Law Offices website.)

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