Phillips & Cohen partner Erika Kelton returns to her column to warn that the SEC’s slow pace in making whistleblower awards could undermine its highly successful whistleblower program.

The problem is evident. Even if only 10 percent of enforcement actions recovering more than $1 million are whistleblower-generated, the SEC’s slow pace of processing awards has led to a mountain of unpaid whistleblower claims.

With more and more award applications being submitted every year, the award pipeline is clogged to overflowing with no relief in sight. The SEC has not articulated how it will clean out this backlog and at the same time keep up with the deluge of whistleblower submissions.

If the glacial pace of whistleblower rewards continues, the SEC risks lasting damage to the program. Many fewer people will risk their jobs and careers to provide the SEC with information about significant securities law violations, which would make it harder for the SEC to stop wrongdoers and protect investors.

In what could be a telling sign, the number of whistleblowers filing claims with the SEC slightly declined in fiscal year 2019 compared to the previous year – the first decline the program has suffered since its inception. While there are no conclusive reasons for that decline, the small number of awards could be a factor.

Read the entire article “The SEC Whistleblower Program: Make Or Break Time,” on

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