Sunday October 26, 2014

SEC Receives 334 Tips in Seven Weeks

The SEC’s Office of the Whistleblower received 334 whistleblower tips in the first seven weeks of the program, with 16.2 percent reporting market manipulation.

The Securities and Exchange Commission reported its Office of the Whistleblower received 334 whistleblower tips in the first seven weeks of the program, in contrast to the SEC’s previous reports of receiving approximately 100 tips per day.

Of the 334 complaints received between the rules’ implementation on August 12 and September 30, 16.2 percent were allegations of market manipulation, 15.3 percent reported on corporate disclosures and financial statements, while offering fraud made up 15.6 percent of complaints. The state with the highest number of tips was California, at 34, followed by New York at 24. Complaints were also filed from international tipsters, ten from China and nine from the U.K.

The statistics were reported in the SEC’s Office of the Whistleblower’s first annually mandated report to Congress on the program’s accomplishments, awards granted and fund balances, including interest and payouts. The SEC Investor Protection Fund, which funds the award program and finances the operations of the SEC Office of the Inspector General’s suggestion program, had an ending balance of $452,788,043.74 on September 30. The Commission also posted its audited financial statements for the fund at www.sec.gov/about/secpar2011.shtml.

“As a result of the relatively recent launch of the program and the small sample size, it is too early to identify any specific trends or conclusions from the data collected to date,” the report noted. “We expect that the Annual Report for 2012 – with the benefit of a full year’s worth of data – will yield such trends and conclusions.”

When the Office of the Whistleblower receives a tip, it is triaged against other recently received reports by Office of Market Intelligence staff and assigned to an appropriate member of the Division of Enforcement, lead by Sean X. McKessy. Complaints regarding existing investigations or that would be better handled by another division or agency are forwarded to the appropriate recipient. While the investigation is ongoing, the Office of the Whistleblower is available to serve as a liaison between the whistleblower and the investigatory staff.

Whistleblowers submitting a claim that results in an action exceeding $1 million are able to apply for an award of ten to 30 percent of the sanctions. When an action may result in a whistleblower award, the SEC posts a Notice of Covered Action on its website and the whistleblower has 90 calendar days to apply for the award. In August, the SEC posted 170 Notices of Covered Action for complaints lodged over the past year. Because the 90 days allotted for the filing of award applications had not passed before the report was written, no data is available on the number of successful applications or the amount any whistleblowers may receive.

Leave a Reply