On Tuesday, November 15, 2011, the Securities and Exchange Commission issued its second Annual Report on the Dodd-Frank Whistleblower Program, as mandated by Congress. The “Securities Whistleblower Incentives and Protections” in Dodd-Frank directed the SEC to make monetary awards to eligible individuals who voluntarily provide original information that lead to successful SEC enforcement actions resulting in the imposition of monetary sanctions over $1 million. Awards are required to be a minimum of 10 percent and up to 30 percent of the monetary sanctions collected.

The report covers fiscal year 2011 and provides valuable insights into both the nature and sources of whistleblower information received since the SEC rulemaking covering the program become effective on August 12, 2011. Through September 30, 2011, the SEC has received 334 whistleblower “tips”, which amounts to over 9 each working day during that period. Interestingly, approximately 10 percent came from overseas; of which almost one third came from China and the United Kingdom, respectively. Even more interesting, only about 4 percent of the tips received appear to involve allegations of potential FCPA violations. This area was expected to generate numerous tips due to the historically large recoveries involved.

On August 12, 2011, the SEC’s Office of the Whistleblower posted Notices of Covered Actions for 170 applicable enforcement judgments and orders issued from July 21, 2010 (when the Dodd-Frank Act became law) through July 31, 2011. On October 5, 2011, fifteen additional cases were posted. There were no whistleblower awards made in fiscal year 2011, as the 90-day period for any of these Notices of Covered Action had not passed by September 30, 2011, but the expectation in that awards will be made early in fiscal year 2012.

The largest identified category of tips overall was “market manipulation”, (16.2 percent) followed by “alleging fraud” (15.6 percent) and “corporate disclosure and financial statements” (15.3 percent).

A copy of the SEC’s report may be read by clicking here.

For further information regarding the Dodd-Frank Act and related matters please contact the authors, a member of Arent Fox’s White Collar, or Securities Practice Groups, or the Arent Fox attorney with whom you work.