The SEC’s Director of Enforcement, Andrew Ceresney, recently gave a speech directed to SEC whistleblowers and SEC whistleblower attorneys. During his speech, the Director praised the successful early years of the SEC whistleblower program and provided some guidance to potential SEC whistleblowers and SEC whistleblower attorneys.
Praise for the SEC Whistleblower Award Program
Mr. Ceresney began his speech by declaring that “I cannot overstate the appreciation we have for the willingness of whistleblowers to come forward with evidence of potential securities law violations. I often speak of the transformative impact that the program has had on the Agency”. He concluded his speech by stating that he anticipates “that the whistleblower program will continue to be a game changer in future years. In fact, my prediction is that it will take us significantly less time to announce that we have passed the $200 million milestone [for awards given out] than it did to pass the $100 million mark.”
The SEC Whistleblower Program is growing, with more and more people choosing to come forward and report securities crimes and violations to the SEC. According to Mr. Ceresney, in 2015 the SEC saw an increase in whistleblower tips of 30% over fiscal year 2012, and added that “we are on target to exceed that level this year.”
He also chose to mention three broad “classes” or types of cases that have seen double-digit increases in tips reported to the SEC by whistleblowers. After each one, he specifically stated that the SEC hopes these whistleblower reporting trends will continue.
Urging Potential Whistleblowers to Report to the SEC as Soon as they Learn of Misconduct
One important message that Mr. Ceresney emphasized to potential SEC whistleblowers “is to report as soon as you learn of misconduct”. Some of the reasons he gave for this were “you never know whether someone else will report, whether the information will become stale, or whether the statute of limitations will run. Coming forward without delay also helps prevent misconduct from continuing unabated while investors suffer more harm.”
Moreover, “Unreasonable delay in the reporting of information to us is a significant factor the Commission considers in determining the amount of a whistleblower award.” According to Mr. Ceresney, “approximately 20% of the awards made through 2015 were reduced because of an unreasonable reporting delay.”
The Importance of SEC Whistleblower Attorneys
Mr. Ceresney also commended the involvement of SEC whistleblower attorneys and explained some of the ways that the Commission finds their involvement to be helpful. To my knowledge, this is the first time that a senior SEC official has publicly expressed views specifically about the role and significance of SEC whistleblower attorneys.
According to Mr. Ceresney, “we welcome the involvement of” SEC whistleblower lawyers. Experienced SEC whistleblower lawyers “can help with up-front triage of tips to identify those that have a nexus with the federal securities laws and that may have merit.” Furthermore, experienced SEC whistleblower lawyers “can work with whistleblowers going forward to identify information that will be important to us and that will allow us to advance our investigations.”
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The Pickholz Law Offices, an SEC whistleblower law firm, has represented employees, officers, and directors in SEC whistleblower cases involving financial institutions and public companies listed in the Fortune Top 10, Top 20, Top 50, Top 100, Top 500, and the Forbes Global 2000. We were the first law firm ever to win an SEC whistleblower award for a client on appeal to the full Commission in Washington, an achievement that Inside Counsel magazine named as one of the milestones of the SEC whistleblower program.
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