An SEC whistleblower has penned an essay explaining why they “broke Wall Street’s code of silence.” The essay, published on September 14 by Insider Investor, is written by an anonymous whistleblower who recently received a $2.5 SEC whistleblower award alongside another whistleblower. The essay is a testament to the success of the SEC Whistleblower Program in incentivizing whistleblowers to expose corporate fraud.
The whistleblower explains that as a financial analyst, they are well-positioned to spot financial irregularities that could signify fraud. However, they explain that, before the establishment of the SEC Whistleblower Program, the risks of blowing the whistle outweighed the rewards. “We can be ostracized by our own firms for impeding their ability to conduct investment-banking business with the companies we cover,” the whistleblower stated. They recount that skepticism about the SEC’s willingness to act on credible tips as well as Wall Street’s culture of silence led them, and “doubtless many of [their] peers, to turn a blind eye to potential frauds.”
The whistleblower explains that they did not blow the whistle on Orthofix for selfish reasons. Instead, the incentives and protections of the SEC Whistleblower Program allowed the whistleblower to simply do the right thing. As the whistleblower explains, “The reality is that markets require all hands to clean the street. It’s dirty; we know it. Corruption disrupts our attempts to ensure free and fair markets. Worse, it hurts investors.”
Through the SEC Whistleblower Program, individuals who willingly provide the agency with original information that leads to a successful enforcement action are entitled to monetary awards of 10-30% of funds recouped by the SEC. The program also ensures confidentiality and other anti-retaliation protections for whistleblowers.
On September 23, the SEC will vote on proposed changes to its whistleblower program. Whistleblower advocates warn that a number of these proposed changes would significantly undermine the efficacy of the program.