On December 19, 2019, the U.S. Commodity Futures Trading Commission (CFTC) announced that it will award more than $1 million to an individual whose tip helped expose a securities fraud scheme and eventually led to the CFTC filing charges. The individual first provided the information through the employer’s internal compliance program, which the employer submitted to another regulator, and the individual subsequently provided that information directly to the CFTC. The award is significant because it recognizes that individuals are eligible to receive an award for: (1) being the original source of information the CFTC receives from another regulator; and (2) a tip that leads to evidence of a violation the CFTC ultimately charges, even if the reported conduct itself does not form the basis for those charges. READ MORE
The SEC’s Office of the Whistleblower (“OWB”) released its Fiscal Year 2019 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 15, 2019. The Report analyzes the tips received over the last twelve months by the OWB, provides additional information about the whistleblower awards to date, and discusses the OWB’s efforts to combat retaliation and other actions that muzzle whistleblowers. To date, the SEC has recovered over $2 billion in total monetary sanctions from its enforcement actions arising from whistleblower tips, including more than $1 billion in disgorgement of ill-gotten gains and interests, and it has or is scheduled to return almost $500 million to harmed investors. READ MORE
On July 16, 2019, three prominent whistleblower law regulators spoke at PLI’s Corporate Whistleblowing in 2019, which was co-chaired by Orrick partners Mike Delikat and Renee Phillips. With the standard disclaimer that their comments and opinions were their own and not the official comments of their respective agencies, each spoke about their agencies’ whistleblower program’s current progress, challenges, and priorities. READ MORE
On May 6th, the Commodity Futures Trading Commission (“CFTC”) announced that it made a whistleblower award of approximately $1.5 million to an individual whistleblower. The individual provided information that assisted in the successful prosecution of a CFTC action and a related action brought by another federal regulator. In particular, the CFTC recognized that the whistleblower initially sought to report his or her concerns internally prior to reporting to the CFTC, and it enhanced the individual’s award as an incentive.
In making the announcement, the Director of CFTC’s Whistleblower Office Christopher Ehrman explained, “While there is no requirement that a whistleblower report internally before approaching the Commission, today’s award demonstrates that the Commission may pay enhanced awards to those that do – that is one of the positive factors set out in our rules for the Commission to consider in making its award determination.” Furthermore, the CFTC recognized that the information the claimant provided “was directly incorporated into strategy involving witness interviews, and his/her early assistance saved Commission resources through his/her explanation of a complex scheme.”
Since the beginning of the CFTC’s whistleblower program in 2014, the agency has awarded more than $85 million to whistleblowers.
In February, the Internal Revenue Service (IRS) released its FY 2018 Annual Report and announced a record-breaking year for the agency’s whistleblower program. Overall, whistleblowers provided information that contributed to the agency’s recovery of over $1.44 billion during the course of the year. As a result, the IRS awarded $312 million in bounty awards to whistleblowers in FY2018, an almost ten-fold increase from the $33.9 million in awards it made in FY2017. Of the 217 total awards the agency made to whistleblowers in FY 2018, 31 were mandatory awards under Internal Revenue Code section 7623(b) and 186 were discretionary awards under section 7623(a) (which applies to smaller cases). The average award percentage from the total amount collected was 21.7% – up from 16.6% in FY 2016 and 17.8% in FY 2017. READ MORE
The U.S. Commodity Futures Trading Commission (CFTC) announced earlier this month that it had awarded more than $2 million to an individual who provided “critical information through independent analysis of market data” contributing both to a successful CFTC action and related action brought by another federal regulator. The payout is the first of its kind for the CFTC because it is the first time the agency has awarded a whistleblower who was a company outsider. READ MORE
This article was co-authored by Omar Madhany, Associate at Borden Ladner Gervais LLP , and Mike Delikat, who co-heads the Whistleblowing Taskforce at Orrick.
On February 27, 2019, the Ontario Securities Commission (OSC)—Canada’s largest securities regulator—announced that it had awarded $7.5 million to three whistleblowers who provided tips that led to enforcement actions. (see OSC news release here). The awards are the first ever made under Ontario’s whistleblower bounty program, which was patterned closely after the bounty provisions of Dodd-Frank. While these awards are small by comparison to recent SEC bounty awards of $54 million to two whistleblowers in September 2018 and a separate composite mega-award of $83 million to three whistleblowers in a single enforcement action on March 19, 2018, nonetheless these Canadian awards have garnered significant attention and press coverage in Canada.
On September 6, the SEC issued awards totaling more than $54 million to two whistleblowers who provided critical information and continued assistance to the agency in an enforcement action. This large award follows another composite mega-award of $83 million to three whistleblowers in a single enforcement action on March 19, 2018.
The September 6 award of $39 million to one claimant constitutes the second-largest award in the SEC whistleblower program’s history. The agency awarded the second whistleblower $15 million. Jane Norberg, Chief of the SEC’s Office of the Whistleblower, stated that whistleblowers “serve as invaluable sources of information, and can propel an investigation forward by helping [the SEC] overcome obstacles and delays in investigation.” READ MORE
On June 28, the Securities Exchange Commission (“SEC” or “Commission”) voted to propose amendments to its whistleblower program. As SEC Chair Jay Clayton explained, the proposed changes would “strengthen the whistleblower program by bolstering the Commission’s ability to more appropriately and expeditiously reward those who provide critical information that leads to successful enforcement actions.” The SEC issued a press release outlining the proposed rules, which would: (1) provide the Commission with additional tools in making whistleblower awards; (2) clarify the requirements for anti-retaliation protection under the whistleblower statute; (3) provide interpretive guidance to help clarify the meaning of “independent analysis”; (4) increase efficiencies in the whistleblower claims review process; and (5) clarify various miscellaneous policies and procedures. READ MORE