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SEC Reports 334 Whistleblower Tips and 170 Enforcement Orders in First Seven Weeks of Whistleblower Award Program

November 21, 2011

The Securities and Exchange Commission released its first annual report on the new SEC Whistleblower Award Program, covering the period from the program’s inception on August 12 to the end of fiscal year 2011 on September 30. During those seven weeks, the Commission received an astounding 334 whistleblower tips from individuals in 37 states, as well as from individuals in several foreign countries, including China and the United Kingdom. The most common categories for tips regarded allegations of market manipulation, false corporate disclosures and financial statements, or outright fraud.

The Commission also explained the process by which whistleblowers who report securities law violations can claim an award if the information reported results in sanctions:

The award process begins following the entry of a final judgment or order for monetary sanctions that . . . exceed $1 million. Following the entry of such judgment or order, the Office of the Whistleblower publishes a Notice of Covered Action. . . . Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award. . . .

Since August 12, the Office of the Whistleblower has posted notices for 170 enforcement judgments or orders for which whistleblowers would be eligible for an award if the Commission receives the whistleblower’s application within 90 days.

The Commission has not yet issued awards under the new program, because applications from the first set of notices will not be processed until the beginning of fiscal year 2012. In the meantime, SEC officials have noted the high quality of the whistleblower tips they have received and expect to issue the first awards under the new program soon.