Skip to Content

What Successful Whistleblowers Have in Common

As required by the Dodd-Frank Act, the SEC makes monetary awards to eligible individuals who voluntarily provide original information that leads to successful SEC enforcement actions resulting in monetary sanctions over $1 million, and successful related actions. In its 2014 Annual Report to Congress on the Dodd-Frank Whistleblower Program, the SEC recently shed some light on the nature of successful whistleblowers.

One striking takeaway from the report is that only a very small percentage of whistleblowers ever receive a monetary award. Since the program’s inception in August 2011, the SEC has received 10,193 whistleblower tips, including 3,620 tips during the SEC’s 2014 fiscal year.  While the number of tips has increased each year, there have been only 14 whistleblower awards, involving 10 or fewer SEC enforcement matters. Nine of the awards came in the 2014 fiscal year.  

According to the report, the whistleblowers who received awards:

  • identified specific individuals involved in specific transactions evidencing, or specific documents (or the specific locations of documents) substantiating, the whistleblower’s fraud allegations;
  • alleged misconduct that was relatively current or ongoing; and
  • provided additional information or assistance to the SEC staff during the course of its investigation.

More than 40 percent of the individuals who received awards were current or former company employees. Of these, more than 80 percent raised their concerns internally before reporting to the SEC.  Twenty percent of the award recipients were contractors, consultants (or solicited to act as consultants) for the company committing the fraud. The remaining award recipients obtained their information "because they were investors who had been victims of the fraud, or were professionals working in the same or similar industry, or had a personal relationship with one of the defendants."

©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.