Securities Industry Acclimates to Whistle-Blowers

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By Rob Tricchinelli

Oct. 17 — There has been a shift in how corporations handle whistle-blower complaints as the SEC's bounty program for tips continues to expand, Enforcement Director Andrew Ceresney said.

The program has “had a significant industry impact,” Ceresney told Bloomberg BNA Oct. 13. “I think many companies are now much more sensitive to the issues.”

The SEC has paid out more than $100 million to whistle-blowers and tips to the agency have increased year after year (169 SLD, 8/31/16). The bounty program allows the SEC to give money to tipsters whose information leads to agency sanctions of more than $1 million—typically between 10 and 30 percent of the amount collected.

700 Investigations

The increase in tips “shows the program is getting the public acknowledgment that it should,” Ceresney said in an interview before he addressed the Securities Enforcement Forum in Washington.

SEC enforcers and staff are tracking roughly 700 investigations either based on whistle-blower tips or incorporating whistle-blowers somewhere in the case, SEC Deputy Enforcement Director Stephanie Avakian said during a panel at the same event.

Companies are beefing up their internal compliance programs to account for the changing culture, Ceresney said. That shift was echoed by several prominent securities attorneys who spoke at the enforcement forum.

Employees at companies with a “strong corporate culture” are more likely to handle complaints internally and less likely to report to the government as an “avenue of first recourse,” William R. McLucas, chair of the securities department at Wilmer Cutler Pickering Hale & Dorr LLP in Washington, said at the conference. McLucas was SEC enforcement director from 1989 to 1998.


Whistle-blowers also are providing tips on foreign bribery matters, the SEC's Kara Novaco Brockmeyer said at the forum.

Brockmeyer is the agency's chief enforcer for cases under the Foreign Corrupt Practices Act.

The agency's first-ever deferred prosecution against a person in an FCPA case, she said, relied on a whistle-blower. In that case, PTC Inc. and its Chinese subsidiaries also reached a $28 million settlement with the SEC over allegations of bribing Chinese officials (31 SLD, 2/17/16).

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To contact the editor responsible for this story: Phyllis Diamond at

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To see Bloomberg BNA's interview with Ceresney, go to

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