The Dodd-Frank Act enacted in July 2010 contained whistleblower provisions applicable to all securities law violations including the Foreign Corrupt Practices Act.
In this prior post from July 2010, I predicted that the new 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 that predicted that the whistleblower provisions would have a significant impact on FCPA enforcement. So anxious was FCPA Inc. for a marketing opportunity to sell its compliance services, some even called the generic whistleblower provision the FCPA’s “new” whistleblower provisions.
So far, there has not been any reported whistleblower award in connection with an FCPA enforcement action. Given that enforcement actions (from point of first disclosure to resolution) typically take between 2-4 years, it still may be too early to effectively analyze the impact of the whistleblower provisions on FCPA enforcement.
Whatever your view on how the whistleblower provisions may impact FCPA enforcement, it was previously noted that the best part of the whistleblower provisions were that its impact on FCPA enforcement can be monitored and analyzed because the SEC is required to submit annual reports to Congress.
Recently, the SEC released (here) its annual report for FY2015 and of the 3,923 whistleblower tips received by the SEC in FY2015, 4.7% (186) related to the FCPA.
As noted in this similar post from last year, of the 3,620 whistleblower tips received by the SEC in FY2014, 4.4% (159) related to the FCPA. As noted in this similar post from two years ago, of the 3,238 whistleblower tips received by the SEC in FY2013, 4.6% (149) related to the FCPA. As noted in this similar post from three years ago, of the 3,001 whistleblower tips received by the SEC in FY2012, 3.8% (115) related to the FCPA. In FY2011 (a partial reporting year) 3.9% of the 334 tips received by the SEC related to the FCPA.
In short, FCPA “tips” have consistently constituted only a minor component of the SEC’s whistleblower program.
Yes, in the future there will be a whistleblower award made in the context of an FCPA enforcement action. Yes, there will be much ink spilled on this occasion and wild predictions about this “new trend.”
Yet, I stand by my prediction – now 5.5 years old, that Dodd-Frank’s whistleblower provisions will have a negligible impact on FCPA enforcement.