From the editors: Podcast Insights from the SEC’s Office of the Whistleblower Annual Report

Whether you are working out, commuting to work, or just seeking entertainment while tackling household chores, podcasts offer a perfect blend of engagement and convenience. As almost everyone and their pet has a podcast nowadays, we like to help you by highlighting those podcasts you should listen to if you are interested in white-collar crime, fraud and regulatory enforcement. This month we recommend: the FCPA Compliance Report – Carrie Penman with Insights from The SEC’s Office of The Whistleblower Annual Report.

On 14 November 2023, the Securities and Exchange Commission (SEC) shared its annual Office of the Whistleblower Report with the United States Congress. The report details how the SEC Whistleblower Program performed but also provides some valuable lessons for compliance professionals, (forensic) accountants and legal professionals.

Office of the Whistleblower

The SEC Office of the Whistleblower program provides everybody the opportunity to report concerns of corporate wrongdoing. As per SEC website: “Assistance and information from a whistleblower who knows of possible securities law violations can be among the most powerful weapons in the law enforcement arsenal of the Securities and Exchange Commission. Through their knowledge of the circumstances and individuals involved, whistleblowers can help the Commission identify possible fraud and other violations much earlier than might otherwise have been possible. That allows the Commission to minimize the harm to investors, better preserve the integrity of the United States’ capital markets, and more swiftly hold accountable those responsible for unlawful conduct.” The Commission is authorised to provide monetary awards to eligible individuals who come forward with useful information that leads to enforcement action in which over USD 1 million in sanctions is ordered. The range for awards is between 10% and 30% of the sanction.

FY 2023 Office of the Whistleblower report

The FY 2023 report notes that more than 18,000 whistleblower tips were submitted, which is almost 50% more than the previous record set in FY 2022. Furthermore: “The U.S. Securities and Exchange Commission’s Whistleblower Program continued to grow and strengthen in Fiscal Year (FY) 2023, establishing new records for the Program. In FY 2023, the Commission awarded nearly $600 million—the highest annual total by dollar value in the Program’s history—to 68 individual whistleblowers.1 These totals include a single award for almost $279 million—the largest in the history of the Program. The SEC has now awarded more than $1.9 billion to 397 individual whistleblowers since the beginning of the Program in 2011.“

FCPA Compliance Report podcast

The FCPA Compliance Report podcast dives deeper into the statistics of the report and derives lessons that can be learned. If you are interested in how the US whistleblower program can impact your organisation, listen to the podcast.

One remarkable lesson that we took from Office of the Whistleblower Report is that in FY 2023 one individual whistleblower received a USD 279 million award, the largest in the history of the Whistleblower Program. The whistleblower provided information and substantial ongoing assistance to a SEC investigation. This most likely will lead to a further increase in tips to the SEC the coming years.

Another noteworthy observation is that the majority of whistleblowers who reported to the SEC, initially raised their concerns internally within the organisation they later reported about. This suggests that these whistleblowers may not have received adequate response or investigation of their concerns. The key lesson for compliance professionals is the importance of establishing and maintaining an effective whistleblower program. Such programs should ensure that concerns raised by employees are taken seriously and investigated with due care.

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