On November 16, Jay Clayton, Chairman of the U.S. Securities and Exchange Commission (SEC), confirmed he will end his tenure as Chairman at the end of the year. Clayton will leave the SEC as one of its longest-serving chairs. His three-and-a-half-year tenure featured a strong commitment to the SEC Whistleblower Program and included record-setting years for the program.
Clayton was sworn in as SEC Chairman on May 4, 2017. The SEC released a report detailing some selected accomplishments of the SEC during Clayton’s tenure.
Clayton is quoted at the top of the report as saying: “The accomplishments listed below are a testament to the 4,500 women and men of the SEC and their unwavering, collective commitment to the SEC’s mission to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation… It has been the privilege and honor of a lifetime to serve alongside the women and men of the SEC.”
According to the report, since May 2017 the SEC has brought over 2,750 enforcement actions resulting in over $14 billion in financial remedies, of which approximately $3.5 billion was returned to harmed investors. In the 2020 fiscal year, the SEC ordered financial remedies totaling a record-setting $4.68 billion.
During Clayton’s tenure, the SEC awarded approximately $565 million to whistleblowers – a substantial majority of the $720 million awarded in total in program history. These awards include the six largest awards in program history, including the record $114 million award issued in October. The 2020 fiscal year was a record year for the SEC Whistleblower Program. During the fiscal year, the SEC granted $175 million in whistleblower awards to 39 individuals – both record totals. The SEC is currently on pace to shatter that record in the 2021 fiscal year. Since the 2021 fiscal year began on October 1, the SEC has issued approximately $155 million to six whistleblowers.
In September 2020, the SEC approved rule changes to its whistleblower program. The SEC hailed these rule changes as steps which would add clarity, transparency and efficiencies to the program and allow the SEC to pay larger whistleblower awards at a faster pace. While some whistleblower advocates and two SEC Commissioners expressed reservations about specific rule changes, the final changes were largely seen as a win for whistleblowers. Notably, at the vote Clayton and the other Commissioners all expressed their commitment to the whistleblower program.
In a statement before the vote on the rule changes, Clayton said the following in regards to the whistleblower program:
“Over the past ten years, the whistleblower program has been a critical component of the Commission’s efforts to detect wrongdoing and protect investors and the marketplace, particularly where fraud is well-hidden or difficult to detect… Numbers never tell the whole story, but here they are a clear and loud voice for our commitment to Congress’s direction to implement a robust and effective whistleblower program… I want to note our appreciation to whistleblowers who, sometimes at great risk to their livelihood, report suspected securities laws violations to the SEC. Our whistleblower program has been a success because of their efforts. Working together, we have stopped frauds and prevented losses for countless investors.”
The identity of the next SEC Chairman is currently unknown. The position will be appointed by President-elect Joe Biden. Individuals reportedly under consideration for the position include Preet Bharara, Manhattan’s former top federal prosecutor.