The Dodd-Frank Act enacted in July 2010 contained whistleblower provisions applicable to all securities law violations including those under the Foreign Corrupt Practices Act.
In this prior post from July 2010, I predicted that the whistleblower provisions would have a negligible impact on FCPA enforcement. As noted in this prior post, my prediction was an outlier (so it seemed) compared to the flurry of law firm client alerts predicting that the whistleblower provisions would have a significant impact on FCPA enforcement. Many FCPA Inc. participants seemed so eager for a marketing opportunity to sell compliance services, that some even called the generic whistleblower provision the FCPA’s “new” whistleblower provisions.
Whatever your initial view was on how the whistleblower provisions may impact FCPA enforcement, it was previously noted that the best part of the whistleblower provisions was that its impact on FCPA enforcement could be monitored and analyzed because the SEC is required to submit annual reports to Congress.
Recently, the SEC released its annual report for FY2022 and, like the prior ten years, FCPA “tips” continue to be a minor component of the SEC’s whistleblower program.
Specifically, according to the SEC’s report, of the 12,322 whistleblower tips received by the SEC in FY2022, 202 (1.6%) related to the FCPA. This percentage of FCPA “tips” vs. overall tips is the lowest in the history of the whistleblower program.
- As noted here, of the 12,200 tips received by the SEC in FY2021, 258 (2.1%) related to the FCPA.
- As noted here, of the 6,900 tips received by the SEC in FY2020, 208 (3.0%) related to the FCPA.
- As noted here, of the 5,200 tips received by the SEC in FY2019, 200 (3.8%) related to the FCPA.
- As noted here, of the 5,282 tips received by the SEC in FY2018, 202 (3.8%) related to the FCPA.
- As noted here, of the 4,484 tips received by the SEC in FY2017, 210 (4.7%) related to the FCPA
- As noted here, of the 4,218 tips received by the SEC in FY2016, (238) (5.6%) related to the FCPA.
- As noted here, of the 3,923 tips received by the SEC in FY2015, (186) (4.7%)related to the FCPA.
- As noted here, of the 3,620 tips received by the SEC in FY2014, (159) (4.4%) related to the FCPA.
- As noted here, of the 3,238 tips received by the SEC in FY2013, (149) (4.6%) related to the FCPA.
- As noted here, of the 3,001 tips received by the SEC in FY2012, (115) (3.8%) related to the FCPA.
- As noted here, in FY2011 (a partial reporting year) of the 334 tips received by the SEC, (3.9%) (13) related to the FCPA.
Another interesting figure to note is that the approximate 2,150 FCPA tips since FY2011 have yielded perhaps only 8-10 whistleblower bounties paid in connection with an FCPA enforcement action (see here and here for examples). If so, this represents a paltry .4% yield. Stated differently, 99.6% of FCPA “tips” received by the SEC have not, it appears, yielded a whistleblower bounty.
Regardless, I stand by my prediction, now 12.5 years old, that Dodd-Frank’s whistleblower provisions will have a negligible impact on FCPA enforcement. Indeed, it is no longer a prediction but a fact.
More broadly, it is interesting to note that according to the SEC’s most recent report, since the inception of the whistleblower program, the SEC has received approximately 64,720 tips but that awards have been issued to only approximately 330 individuals. This likewise represents a paltry .5% yield rate. Stated differently, 99.5% of SEC whistleblower tips have not yielded a whistleblower bounty.
Set forth below is an additional interesting tidbit about the SEC’s whistleblower program.
“[T]he Whistleblower Program has become fundamentally international in character, with tips received from all over the world. In FY 2022, the foreign countries from which the highest number of tips originated were Canada, the United Kingdom, Germany, China, Mexico, and Brazil.”
Separately, the SEC also recently issued overall enforcement statistics from FY2022 (see here). The report indicates that FCPA enforcement actions constitute 1% of overall SEC enforcement actions. (See here for the prior post posing the question of whether – based on enforcement data – the SEC needs a specific FCPA Unit – one of just a few specialized units within its enforcement division).
