Articles Tagged with Dodd-Frank Lawyers

The Securities and Exchange Commission’s program to reward whistleblowers for coming forward has undoubtedly been an asset in recovering fraud for the regulatory agency. Useful tips from whistleblowers have helped the Securities and Exchange Commission recover over $1 billion in enforcement actions. The SEC whistleblower program offers financial incentives and anti-retaliatory protection for individuals who report qualifying information relating to federal securities law violations. Irrespective of the potential monetary awards, courageous whistleblowers often put a lot in jeopardy when choosing to come forward. Yet, the process for SEC whistleblowers to be rewarded with payouts is slow, according to a Wall Street Journal article.

The WSJ article notes that the time in which whistleblowers receive a response regarding a reward increased from a year in 2012 to over two years presently. Whistleblower attorneys informed the Wall Street Journal that occasionally clients wait years to receive an award even after being deemed eligible by the SEC. The Wall Street Journal attributes the SEC’s slower process to an oversaturation of reward seekers. The Securities and Exchange Commission receives an influx of tips, with many not being useful, according to the WSJ article. Officials reportedly referred to the process for vetting and allocating whistleblower rewards as “demanding”.

Our whistleblower attorneys believe that a quick and efficient claims review process should be a priority given associated risks for the whistleblowers. Additionally, the value whistleblowers have in fostering a less corrupt society are unquestionable. Whistleblowers are immensely beneficial for minimizing fraudulent activity and protecting investors in the securities industry. The Securities and Exchange Commission has even deemed the whistleblower rewards program as their “most powerful weapon” in enforcement. Informative whistleblower tips have helped the SEC with detecting as well as prosecuting securities law violations and enforcement action.

According to an article by Rob Lenihan of Thomson Reuters, published in August 2014, Sean McKessey, head of the SEC’s whistleblower program, was quoted by the Wall Street Journal as saying that the numbers [of whistleblower complaints] will soon grow and “we’re getting close to the sweet spot.” Malecki Law had reported on this Wall Street Journal article and examined the state of Dodd-Frank Whistleblower program, as it existed then, in this blog post. A year into it, let’s examine where we are at with the growing numbers.

During the 2014 fiscal year, the number of whistleblower tips and complaints received by the Commission grew 10.1 % from the year before to 3,620. The Dodd- Frank Whistleblower program, which promises cash rewards for those whose tips lead to a successful investigation by the SEC, has witnessed many milestones in past four years. In a recent development, SEC paid a handsome $3 million to a company insider in July 2015, who helped crack a complex fraud case.

According to Andrew Ceresney, Director of the SEC’s Division of Enforcement. “Insiders may hold the key to helping our investigators unlock intricate fraudulent schemes,” and “by providing significant financial incentives for people to come forward, the SEC’s whistleblower program continues to be profoundly effective in helping us protect investors and hold wrongdoers accountable.” The SEC’s whistleblower program has already paid more than $50 million to 18 whistleblowers, since its inception in 2011, including $30 million in awards in 2014, more than doubling the $14 million rewards it paid in 2013. Let’s hope the trend continues!