In an annual report to Congress, the SEC's Office of the Whistleblower ("Office") reviewed FY 2019 program activities.

According to the report, the Office received slightly fewer tips and awarded significantly less to whistleblowers in FY 2019, as compared to FY 2018. The Office reported that:

  • 5,212 tips were made, which was a slight decrease from FY 2018;
  • California, Pennsylvania, New York, Texas and Florida had the highest number of tips domestically;
  • foreign whistleblower submissions originated from 70 different countries; and
  • $60 million was awarded to whistleblowers in FY 2019 - a decrease from the $168 million in FY 2018, due, in part, to a lapse in appropriations.

SEC Chair Jay Clayton defended proposed amendments to the whistleblower program. Specifically, Mr. Clayton argued that Congressional critics mischaracterized amendments proposing to give the SEC additional discretion for awards that exceeded $30 million. Mr. Clayton emphasized that the amendment would not operate as a "cap" on awards and that the proposal was in line with the congressional mandate permitting the SEC to evaluate award amounts within the range of 10-30 percent. He said there should be no uncertainty about the agency's commitment to the whistleblower program.

Commentary

Lex Urban

One of the key takeaways from the FY 2019 whistleblower program report is that seven of the eight whistleblowers reported their concerns internally at their respective companies. A major concern arising out of the Supreme Court decision in Digital Realty - that required whistleblowers to report to the SEC to receive whistleblower retaliation protection - was that it would lead to a decrease in internal reporting and prevent companies from investigating before a regulator became involved. The results described in the FY 2019 report are good news for companies with robust compliance functions as the opportunity to investigate and self-report appears alive and well, albeit on a compressed timeline.

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