This document summarizes a presentation on SEC whistleblower rules given by attorneys from Paul Hastings LLP. It discusses the evolution of whistleblower legislation including provisions in the False Claims Act, Sarbanes-Oxley Act, and Dodd-Frank Act. Key points include increased incentives for whistleblowers like monetary awards leading to more tips to the SEC. Open legal issues remain around the extraterritorial application of rules and whether internal reporting is protected. Companies are advised to foster compliance cultures and protect whistleblowers to mitigate risks.
SEC
August 29, 2014 award of $30 million to overseas employee who reported fraud
Previous highest award was $14 million
Award amounts are increasing
International reach
4th award to whistleblower living in a foreign country
Andrew Ceresney, Director of Division of Enforcement:
“This whistleblower came to us with information about an ongoing fraud that would have been very difficult to detect.”
Sean McKessey, Chief of Office of Whistleblower:
“This award … shows the international breadth of our whistleblower program as we effectively utilize valuable tips from anyone, anywhere to bring wrongdoers to justice. Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of U.S. securities law.”
“Blowing the whistle is increasingly worth big bucks…. The Securities and Exchange Commission said Monday that a foreign tipster will collect a record whistleblower award of more than $30 million, mor than twice as much as the highest previous award…. The award to the foreign tipster shows that non-US residents stand to gain big from the agency’s bounty program.” - from the article