In 2012, The Office of the Whistle-blower was established to administer the SEC’s whistle-blower program formed in accordance with Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 21F of the Securities Exchange Act of 1934.
The Act provides that the SEC shall pay awards to eligible whistle-blowers who voluntarily provide the SEC with original information that leads to a successful enforcement action yielding monetary sanctions of over $1 million. The award amount is required to be between 10 percent and 30 percent of the total monetary sanctions collected in the Commission’s action or any related action such as in a criminal case. The Dodd-Frank Act also expressly prohibits retaliation by employers against whistle-blowers and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act.
The Annual Report
According to the Annual Report on the Dodd-Frank Whistle-blower Program for Fiscal Year 2012, as of September 2011, the Fund was fully funded, with an ending balance of $452,788,043.74.
In fiscal 2012, the SEC received 3,001 tips relating to Disclosure Fraud, Financial Reporting Fraud, Insider Trading, Trading Pricing, Foreign Corrupt Practices, Unregistered offerings, Public Pension, and Market Events.
Of these 3001 tips in 2012, the SEC has not commented on the number of enforcement actions it actually initiated, but in fiscal 2012, of the $452 million held in the Fund, the SEC paid a total of $45,739, which of course does not include $500 it paid to one Whistle-blower in September 2012.
SEC Chairperson, Mary L. Schapiro
The SEC’s Chairperson, Mary L. Schapiro, who was formerly in charge of FINRA, previously known as the National Association of Securities Dealers, Inc., a Self-Regulatory Organization, comprised of and governed by securities broker-dealers, understandably believes that the program is a wonderful success. In a press release issued earlier this week she is quoted as saying “In just its first year, the whistle-blower program already has proven to be a valuable tool in helping us ferret out financial fraud,” said SEC Chairman Mary L. Schapiro. “When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources.”
In all fairness to the SEC, as of November 20, 2012, just in connection with misconduct that led to or arose in connection with the Financial Crisis, it charged 129 entities, including 57 CEOs, CFOs, and Other Senior Corporate Officers with federal securities fraud, and effected Industry Bars, or Suspensions of 36 individuals, ordered the payment of $1.5 billion in fines and penalties, including Disgorgement and Prejudgment Interest of $754 million, and collected $355 million for harmed investors.
Guiliano Law Group
If you have been the victim of securities fraud you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.