CSS Whistleblower Reduces as Agency Looking at Big Limit Award


The Securities and Exchange Commission reported its first annual reduction of tips from corporate whistleblowers as the agency prepares to finalize a proposal that could limit the size of major awards.

The SEC received 5,212 tips during the 2019 fiscal year which ended in September, a decrease of 1% on the previous year, the agency said Friday in an annual report to Congress. The biggest fall was tips on possible fraud cases in security offers, which the previous year promoted.

The overall decline of years of steady growth has continued since the program was established by Congress following the financial crisis. Tips in 2018 18% from 2017.

Under the SEC whistleblowers program, tipsters are entitled to awards that can reach ten million dollars if they provide useful information in cases where they result in corporate penalties. Awards are between 10% and 30% of monetary penalties in cases where companies are fined more than $ 1 million.

In March, the agency issued its third largest award, providing $ 50 million to two whistleblowers who provided information against

JPMorgan Chase

& Co It awarded its biggest award in 2018, providing $ 83 million to three tips that provided information in the case of

American Bank Corp.

The SEC could impose limitations on its largest awards under a proposal introduced last year which would give the agency the option of reimbursing awards in excess of $ 30 million.

Counsel and lawyers with whistleblowing criticized the suggestion, stating that it could discourage people from reporting information about corporate wrongdoing.

SEC Chair

Jay Clayton

they addressed these concerns in a Friday statement, saying that the reviewers misrepresented the recommendation that they limit future awards.

“The Conference vested authority and responsibility in the commission to use our judgment and experience to determine the amounts of awards,” said Mr Clayton.

Erika Kelton,

a whistleblower at Phillips & Cohen LLP said that the suggestion to limit a number of awards could be one reason for the number of prompts implemented this year.

“I have many clients who are very concerned about this – people who have already emerged and I am very concerned that the rules are changing in mid-stream,” she said.

“Then there are others who are getting in touch with us at the start of the process and they are also raising this issue as a matter of concern,” she said. “And it certainly makes their decision whether to go ahead and become an CSS whistleblower.”

During the 2019 fiscal year, the SEC received the top tips in three major categories: corporate disclosure, fraud and offering manipulation. The agency also stated that it had received 289 cash currency tips, following the introduction of this category in 2018.

Write Kristin Broughton at kristin.broughton@wsj.com and Dylan Tokar at dylan.tokar@wsj.com

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