Senator Grassley Calls for More Information on SEC Whistleblower Program

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On April 4, Senator Charles Grassley (R-IA), Ranking Member of the Senate Committee on the Budget, wrote a letter to Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), expressing concerns about delays and lack of transparency in the agency’s whistleblower compensation

Since it was established in 2010, the SEC Whistleblower Program has achieved tremendous success. Whistleblower tips have increased year by year, with the SEC receiving more than 18,00 whistleblower tips in Fiscal Year (FY) 2023, compared to over 12,300 in FY 2022 and over 12,200 in FY 2021. 

However, as Grassley pointed out, despite the increase in tips, the SEC issued a lower-than-anticipated quantity of awards for whistleblowers in FY 2023. In his letter, Grassley requested more information about the reports that the SEC has shared, and he asked several questions about how the SEC made reward determinations.

According to the SEC’s Annual Report for FY 2023, the SEC has distributed more than $1.9 billion in whistleblower awards to 297 individuals since the program’s beginning. Since the program’s inception, the quantity of awards has increased; in the two prior fiscal years, 2022 and 2021, the SEC distributed over 100 awards. However, although the whistleblower office received a record number of tips in FY 2023, they only distributed $600 million in awards to 68 whistleblowers, leading Senator Grassley and whistleblower advocates to question the cause of the decrease.

Senator Grassley stated in his letter that the SEC’s Congressional Budget Justifications of FY 2024 and FY 2025 do not provide sufficient details regarding the joint resources of the Division of Enforcement (ENF) and the Office of General Counsel (OGC) used by the staff of the SEC whistleblower office. Moreover, reports indicate that the SEC won’t release the number of attorneys working in the office, making it challenging to determine whether the SEC has assigned appropriate resources to ensure a timely and efficient process for whistleblower claims. 

Grassley requested the following information for independent oversights conducted by the Congress no later than April 18, 2024 – a deadline which has already passed: 

  1. The number of SEC positions assigned to review whistleblower tips and process award claims from FY 2021.
  2. Detailed number including tips received, tips reviewed, and etc. from FY 2021, organized by month.
  3. The status of the implementation for the SEC Inspector General recommendations made on December 19, 2022, “SEC’s Whistleblower Program: Additional Actions are Needed to Better Prepare for Future Program Growth, Increase Efficiencies, and Enhance Program Management.” 

Grassley’s letter aims to increase transparency and create a better understanding of whether the SEC is allocating its resources effectively. 

On March 15, Senators Grassley and Elizabeth Warren (D-MA) introduced the SEC Whistleblower Reform Act in order to further strengthen the highly successful SEC Whistleblower Program. The bill bolsters the Dodd-Frank Act’s anti-retaliation protections and ensures that the agency processes award claims in a more timely manner.

According to Allison Herren Lee, former SEC Commissioner and currently Of Counsel at KKC, the SEC Whistleblower Reform Act of 2023 “will help ensure that the SEC Whistleblower Program remains an indispensable tool in the Commission’s efforts to police wrongdoing and protect investors.”

National Whistleblower Center (NWC) is calling for the immediate passage of the SEC Whistleblower Reform Act. It has set up Action Alert calling on whistleblower supports to join them in urging Congress to pass the bill and protect internal corporate whistleblowers.

Join NWC in Taking Action:

Protect Internal Corporate Whistleblowers

Further Reading:

Grassley’s Letter to Gensler 

More SEC Whistleblower News

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