The Chairman of the US Securities and Exchange Commission (SEC), Jay Clayton, has backed the Dodd-Frank Act’s whistleblower reward law, saying that the whistleblower program is an “invaluable component” to the Commission’s “enforcement efforts.”
In a detailed report to Congress issued on the same day, the Commission reported that “the whistleblower program continues to have a significant positive impact on the Commission’s enforcement efforts and protection of investors and markets.”
The SEC confirmed the whistleblower program’s “positive impacts,” including:
• “Whistleblower cases have resulted in over USD2 billion in total monetary sanctions, including more than USD1 billion in disgorgement of ill-gotten gains and interest, of which almost USD500 million has been, or is scheduled to be, returned to harmed investors;”
• The Commission has paid over USD387 million to whistleblowers;
• Over 22% of whistleblower award recipients were foreign nationals reporting illegal conduct abroad;
• The program has had no negative impact on internal compliance programs, as 85% of whistleblowers first raise their concerns internally to corporate management;
• In FY 2019, over 5200 “tips” were reported to the SEC by whistleblowers.
“The SEC’s report confirmed what we have seen for years: the Dodd-Frank Act whistleblower reward program is the backbone of the Commission’s efforts to protect investors from fraud,” says Stephen M Kohn, a partner in the qui tam law firm Kohn, Kohn and Colapinto, and one of the leading whistleblower advocates who helped draft the Dodd-Frank Act and its implementing rules.
“Chairman Clayton’s public support for the whistleblower program demonstrates bi-partisan support for whistleblowers and is a recognition that whistleblowers are the key source for alerting the government to Wall Street rip-offs and corporate crimes,” Kohn adds.
Kohn met with Chairman Clayton on 23 October, 2019, to discuss pending modifications to the SEC’s whistleblower program.
Kohn, who has represented SEC whistleblowers, including one of the top reward recipients, adds: “The program works. It works remarkably well. The SEC is carefully protecting the identity of confidential whistleblowers, and there are numerous whistleblower-initiated investigations underway. It will not take long for the program to recover tens of billions of dollars for investors and hold thousands of fraudsters accountable.”
