SEC Chairman Confirms Dodd-Frank Act Whistleblower Program is an “Invaluable Component” for Successful Securities Fraud “Enforcement Efforts”
In a statement issued last Friday, November 15, 2019, the Chairman of the U.S. Securities and Exchange Commission (“SEC”), Mr. Jay Clayton, praised the Dodd-Frank Act whistleblower reward law, acknowledging that the whistleblower program was 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 $2 billion in total monetary sanctions, including more than $1 billion in disgorgement of ill-gotten gains and interest, of which almost $500 million has been, or is scheduled to be, returned to harmed investors;”
- The Commission has paid over $387 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,” said whistleblower attorney Stephen M. Kohn. Kohn is 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 added. Kohn met with Chairman Clayton on October 23, 2019, to discuss pending modifications to the SEC’s whistleblower program.
Kohn, who has represented SEC whistleblowers, including one of the top reward recipients, added: “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.”
Read more about the SEC Whistleblower Program:
- Statement by SEC Chairman Clayton on Whistleblower Program 2019 Annual Report to Congress.
- SEC 2019 Annual Report to Congress on Whistleblower Program
- SEC Comments filed by Kohn, Kohn & Colapinto:
- July 24, 2018 – Proposed Amendments to the SEC’s Whistleblower Program Rules
- September 18, 2018 – Proposed Rule File Number S7-16-18, Whistleblower Program Rules
- December 14, 2018 – Ensuring the Integrity of the Investor Protection Fund While Timely and Properly Paying Whistleblower Claims
- May 6, 2019 – Supplemental Comment on Proposed Amendment to Rule 21F-9(e) File Number S7-16-18
- September 12, 2019 – Second Supplemental Comment: Proposed Amendment to Rule 21F-9(e)
- October 8, 2019 – IRS Tax Court Ruling Explains Why Proposed Rule 9(e) Must Be Rejected
- October 16, 2019 – Fourth Supplemental Comment: Proposed Rule 21F-9(e)
- October 21, 2019 – Fifth Supplemental Comment: Proposed Rules 21F-6(d) and 21F-9(e)
- How to Qualify for Rewards as An SEC Whistleblower (FAQs)