The US Government has issued its annual report on the bounty claims whistleblower programme. The report highlights how people in the UK provide more tip offs to the US Government than any other country outside the USA.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act or Dodd-Frank) directs the Securities And Exchange Commission of the USA Government (SEC) to make monetary awards to eligible individuals who voluntarily provide original information that leads to successful Commission enforcement actions resulting in monetary sanctions over $1 million and successful related actions.
Awards are required to be made in an amount equal to 10 percent to 30 percent of the monetary sanctions collected. To ensure that whistleblower payments would not diminish the amount of recovery for victims of securities law violations, Congress established a separate fund, called the Investor Protection Fund (Fund), out of which eligible whistleblowers are paid.
The Report disclosed that financial penalties since the program began have now surpassed $975 million, whilst awards to whistleblowers have passed the $160 million mark. So there is very serious money being awarded to individuals from around the world who are blowing the whistle to the US Government.
Clive Howard, Principal lawyer at Slater and Gordon London, who specialises in advising whistleblowers said: “The SEC rules are important for UK whistleblowers but not well known. Whistleblowers do not need to be US citizens or work for US companies to be eligible for awards from the SEC. Many employees working for publicly traded companies, whether US or overseas, will be entitled to blow the whistle to the SEC.”
In 2017 alone the US Government made awards of nearly $50 million.
In the last year the SEC received over 4,400 tips which is an increase of nearly 50% since 2012.
The highest award this year was over $20 million.
The highest ever award paid to a whistleblower was the sum of just over $30 million in 2014.
The type of tip offs related to corporate disclosures, tips regarding fraud; market manipulation tips, insider trading tips and tips relating to trading and pricing.
Mr Howard added: “The UK had the highest number of whistleblowers outside the US for sourcing tips, with 84 tips to the SEC in the last 12 months alone. This was an increase of 33% since 2016.
“This is no surprise to us. At Slater Gordon we have seen a big increase in the number of enquiries from whistleblowers who, in addition to any UK whistleblowing claims, have significant US tips to provide. The fact that tips can be made anonymously to the US Government together with the possibility of recovering large bounty awards, makes the additional option of reporting to the US government attractive.
Mr Howard added: “UK legal protection for whistleblowers is not as strong as it might be. The onus is on the individual to report the wrong-doing, and bring a claim if they are treated detrimentally or dismissed as a result. We could learn something from the US approach which incentivises individuals to report serious fraud and financial malpractice to the relevant authorities so that they can then investigate.”