The following post comes to us from Jonathan Polkes, co-chair of the Securities Litigation Practice Group at Weil, Gotshal & Manges LLP, and is based on a Weil Gotshal alert by Christian Bartholomew and Brianna Benfield Ripa; the complete publication, including footnotes, is available here.
On November 15, 2013, the US Securities and Exchange Commission (“SEC” or “the Commission”) released its Annual Report to Congress on the Dodd-Frank Whistleblower Program (“the Report”). The Report is remarkable for three reasons. First, the Report shows that, despite very significant efforts to publicize the program, the SEC is not seeing a meaningful increase in the number of tips it receives. Indeed, the SEC received essentially the same number of tips in the same categories in 2013 as it did in 2012 (3,283 and 3,001, respectively). Second, consistent with the few awards made under the program, the Report fails to shed any light at all on the SEC’s thought process in making these awards, and provides no insight into how the SEC is applying the highly nuanced factors applicable to award decisions. Finally, the Report does not acknowledge that, for the second year in a row, the largest category of tips were in the “other” category, which suggests that many of these tips are probably meritless, nor does the Report illuminate at all the critical question of how many of the tips the SEC receives actually result in meaningful investigations and cases.
