Securities and Exchange Commission Chair Mary Jo White gave an important speech about whistleblowers last week, saying the SEC whistleblower program has “proven to be a game changer.”
The SEC whistleblower program has brought more and higher-quality tips since it was implemented four years ago, according to White. This has led to “significant enforcement actions on a much faster timetable than [the SEC] would be able to achieve without the information and assistance from the whistleblower,” says White. In fiscal year 2014 the SEC received more than 3,600 tips, a 20 percent increase from the previous year.
White discussed the issue of company confidentiality agreements that discourage employees from reporting concerns about potential wrongdoing to the SEC. Those agreements need to be clear that employees are always allowed to contact the SEC about possible securities law violations, she said.
This past year the SEC took its first enforcement action against a company that attempted to use confidentiality agreements to prevent a whistleblower from communicating with Office of the Whistleblower staff. Responsible companies should embrace – not fear – potential whistleblowers. More than 80 percent of SEC whistleblowers first raised their concerns internally before reporting to the SEC, White says, whistleblowers need to know they won’t face job retaliation. The SEC has paid out more than $50 million to whistleblowers since 2011, with the biggest SEC reward – more than $30 million – going to a Phillips & Cohen client last September.