
Robert A. Marsico
Partner
201-896-7165 rmarsico@sh-law.comFirm Insights
Author: Robert A. Marsico
Date: January 10, 2018
Partner
201-896-7165 rmarsico@sh-law.comThe Securities and Exchange Commission (SEC) recently released its annual whistleblower report. The report comes as the U.S. Supreme Court is set to decide who is protected as a whistleblower under the Dodd-Frank Act in Digital Realty Trust v. Somers.
The SEC’s whistleblower program, which was first launched in 2011, provides a monetary incentive to corporate insiders and others with relevant information concerning potential securities violations to report their information to the Commission. Those who provide high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million are eligible for awards ranging from 10 percent to 30 percent of the money collected by the agency.
Since the beginning of the program, wrongdoers in enforcement matters involving whistleblower information have been ordered by the SEC to pay over $975 million in total monetary sanctions, including more than $671 million in disgorgement of ill-gotten gains and interest. The SEC’s 2017 whistleblower report reveals several interesting trends that can help businesses improve their securities compliance strategies. Below is a brief summary:
The U.S. Supreme Court’s decision will help shape the future of the SEC’s whistleblower program. The specific question before the Court in is whether Dodd-Frank’s anti-retaliation provision for “whistleblowers” extends to individuals who have not reported alleged misconduct to the SEC.
As more fully detailed in a prior article, the SEC’s implementing rule provides protection from retaliation to workers who make protected disclosures regardless of whether they report the information to the SEC or another source. However, the federal courts of appeal have divided regarding whether a whistleblower must complain directly to the SEC in order to qualify as a whistleblower and benefit from the law’s anti-retaliation protections.
The Court heard oral arguments on November 28, although a final decision may not be issued until next June. We will continue to track the case, so stay tuned for updates.
If you have any questions or if you would you like to discuss the matter further, please contact me, Robert Marsico, at 201-806-3364.
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