Category Archives: Whistleblower Program

The Securities and Exchange Commission (SEC) has received 3,001 tips and complaints following the creation of its Whistleblower Program one year ago. The statistics were made public yesterday in the SEC’s Annual Report on the Dodd-Frank Whistleblower Program for Fiscal Year 2012.

According to the report, tips have come from all 50 states, the District of Columbia, Puerto Rico and 49 countries. States with the highest percentage of tips include: California (17.4%), New York (9.8%), Florida (8.1%), Texas (6.3%), New Jersey (4.1%), Illinois (4%), and Pennsylvania(3.6%).

So far, the 3,000-plus tips are focused in three main areas: Corporate Disclosure and Financials (18.2%); Offering Fraud (15.5%); and Manipulation (15.2%).

The full report is available here.

This year, the SEC made its first award under the Whistleblower Program. On Aug. 21, 2012, a whistleblower who helped the SEC stop an ongoing multimillion dollar fraud received an award of 30% – the maximum percentage payout allowed by law.

In that case, the award recipient submitted a tip concerning the fraud and then provided documents and other significant information. The information ultimately resulted in a federal court ordering more than $1 million in sanctions.

The Bank of New York Mellon Corp. has reached an agreement with the state of Virginia concerning accusations that the bank charged hidden markups on currency transactions to Virginia’s employee pension fund. The deal also involves a $1.1 million payment to a whistleblower group.

Pension funds in Virginia, as well as in other states and municipalities, have accused Bank of New York and custodial bank State Street Corp. of deceiving them by using a least-favorable high or low range to price their currency trades and then pocketing the difference, according to a Nov. 9 Dow Jones Newswires story.

The whistleblower in the case is Grant Wilson, a Japanese yen trader on one of BNY Mellon’s foreign exchange desks in Pittsburgh. For the last two of the 10 years he worked with Mellon, Wilson collected information and documents to assist government investigators and a plaintiff legal group, FX Analytics, into the alleged practices at the bank. The information he provided detailed how the alleged scheme worked and how much BNY Mellon made as a result.

Wilson’s actions are among the first under a new initiative by the Securities and Exchange Commission (SEC) to incorporate whistleblowers into its securities fraud prevention strategies. The program, which was launched under the Dodd-Frank financial overhaul, rewards whistleblowers 10% to 30% of the proceeds in cases where penalties exceed $1 million. Since the program’s inception, tips from informants have surged.

Though it’s only a little more than one year old, the SEC’s Whistleblower Office has been inundated with more than 3,000 tips from informants about alleged securities fraud.

The program, which provides significant monetary rewards to whistleblowers who provide original information leading to a successful enforcement case, has seen a noticeable difference in the quality of information being received, said SEC Commissioner Luis Aguilar in an Oct. 18 story by Marketwatch.

According to Aguilar, the SEC receives an average of eight tips per day; so far, tips have come from around the United States and some 45 foreign countries.

On Aug. 21, the SEC issued its first reward under the Whistleblower Program. The informant, who didn’t wish to be identified, received $50,000, or 30%, of the $150,000 thus far reclaimed out of the multimillion-dollar fraud that the person prevented, the SEC says.

The SEC whistleblower program was implemented under Section 922 of the Dodd-Frank Act. It mainly intended to reward individuals who act early to expose violations and who provide significant evidence to help the SEC bring successful cases.