The Securities and Exchange Commission was reported to have received a record number of tips through its whistleblower program in the 2023 fiscal year, according to the National Law Review.
Under the program, created by Congress under the Dodd Frank of 2010, individuals who voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action may be eligible for a whistleblower award.
Speaking at last month’s 2023 Securities Enforcement Forum in Washington, D.C., SEC Chair Gary Gensler stressed that the whistleblower program continues to be a vital tool for the commission in its various investigations.
“The public’s tips, complaints, and referrals (TCRs) are essential to our work as a cop on the beat,” said Gensler. “We received more than 40,000 TCRs in the previous fiscal year, including more than 18,000 from those critical whistleblowers.” The 18,000 total was a significant increase from the previous record set in the 2022 fiscal year, when 12,300 tips were received.
The identity and confidentiality of all whistleblowers is protected by the SEC, and no information is disclosed that could reveal their identity. The payments come from an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.
The commission says assistance from whistleblowers who know of possible securities law violations can help to identify possible fraud and other violations much earlier than might otherwise have been possible.
Legislation introduced in the U.S. Senate, the SEC Whistleblower Reform Act of 2023, would extend protections to corporate whistleblowers who report potential securities violations internally but not externally to the SEC. The bill also would ensure that claims and awards are processed in a timely manner, and clarify that whistleblowers cannot waive their rights through a predispute arbitration agreement.
Whistleblower awards can range from 10 to 30 percent of the money collected when the monetary sanctions exceed $1 million.
The attorneys at Hyman Cotter PC include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. Our attorneys fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. If your firm is facing an investigation from a regulatory agency, please contact Hyman Cotter PC at 312-291-4600 or through our online contact form.
