Sunday Read: Annual Reports
This article was sent as part of NWC’s “Sunday Read” series that aims to educate supporters about whistleblower stories and whistleblower legislative or policy initiatives and current events. For more information like this, please join our mailing list.
Every year, important whistleblower programs issue Annual Reports outlining their success that year. These reports are critical to showing the value of these programs. Reporting also encourages more whistleblowers to come forward. By publishing these annual reports, agencies show whistleblowers that their tips are taken seriously and that their actions lead to change.
In this Sunday Read, we will discuss 2022 annual reports from essential Dodd-Frank Act whistleblower programs at the Commodities Futures Trading Commission and Securities and Exchange Commission. NWC frequently refers to these agencies annual reports in policy and advocacy efforts year-round. We will also summarize NWC’s achievements in 2022 so you know how much of an impact our programming has had this year. Thank you for reading!
Commodity Futures Trading Commission has a Record Year!
On November 1, the Commodity Futures Trading Commission (CFTC) published agencies annual whistleblower program report. The CFTC program was established by the Dodd-Frank Act, provides whistleblowers an anonymous avenue to report securities violations, promises confidentiality, and issues whistleblower awards in successful cases over $1 million.
The report, “Whistleblower Program & Customer Education Initiatives” outlines the CFTC’s record year stating that in 2022 the CFTC awarded over $200 million to whistleblowers. Among these rewards, the CFTC reports their record-breaking award of nearly $200 million to 1 whistleblower. This reward relates to a transnational violation and includes related action proceeds (meaning there were multiple agencies involved in the enforcement action). The large reward reflects the continued success of the CFTC program and the incredible value of whistleblowers who report transnational crime.
The CFTC received 1,506 whistleblower tips, marking another record for the program. In 2022, the CFTC received over 50% more tips than in 2021. According to the report, the CFTC “received tips and complaints regarding . . . record keeping or registration violations, illegal swap dealer business conduct, solicitation, misappropriation, insider trading, and other types of fraud, use of deceptive or manipulative devices in trading, as well as spoofing, and other forms of disruptive trading or market manipulation.” And that, “The majority of tips received during the Period involved fraudulent misappropriation and fraudulent solicitation involving crypto/digital assets (e.g., pump-and- dumps, fraudulent representations of opportunities, or refusals to honor withdrawal requests).” Noting that “There has been a rise in both crypto/digital asset schemes and some general investment schemes originating from online communications through social media or dating sites (i.e., romance scams).”
NWC has long called for more effective use of whistleblower tips regarding crimes and regulatory violations online. It is encouraging to see that CFTC whistleblower submissions reflect the need for this oversight and NWC urges the CFTC program to take online and crypto violations seriously.
Securities and Exchange Commission Announces Another Incredible Year:
On November 15, 2022, the Securities and Exchange Commission (“SEC”) published their “2022 Annual Report to Congress on the Dodd-Frank Whistleblower Program”. The program, established by the Dodd-Frank Act in 2010, provides whistleblowers an anonymous avenue to report securities violations, promises confidentiality, and issues whistleblower awards in successful cases over $1 million. NWC has long celebrated this program and worked with staff at the SEC to educate them about whistleblower’s firsthand experiences and the impact their rules have on whistleblower decisions.
In 2022, the program awarded $229 million to 103 whistleblowers. There were 12,300 tips submitted. Together, the SEC has awarded $1.3 billion to over 300 whistleblowers. 2022 was a record year for the agencies receipt of whistleblower tips. According to the SEC report, “Enforcement actions brought using information from meritorious whistleblowers have resulted in orders for more than $6.3 billion in total monetary sanctions, including more than $4.0 billion in disgorgement of ill-gotten gains and interest, of which more than $1.5 billion has been, or is scheduled to be, returned to harmed investors.”
In the report, Creola Kelly, Chief of the Office of the Whistleblower, summarized the Commission’s view on whistleblowers stating: “Regardless of whether a whistleblower is a corporate insider, a main street investor, or an unrepresented claimant, the Commission vigorously safeguards their identity while rewarding eligible individuals who identify bad actors in our markets.”
Further, in the report, the SEC outlines significant actions it has taken to penalize companies for attempting to restrict potential whistleblowers from reporting by including illegal non-disclosure terms in agreements. The Commission prevailed on two major cases holding companies accountable for their failure to ensure all parties understood that no one can be restricted from, or punished for, communicating with the SEC about suspected violations. NWC is committed to raising awareness about the importance of policing illegal NDA’s and applauds the SEC for prevailing in these actions.
National Whistleblower Center Continues to Make Strides for Whistleblowers Worldwide
On November 26, NWC published our annual report. The report outlines NWC’s successful work amplifying whistleblower voices and working with regulators and legislators in 2022. This year, the National Whistleblower Center engaged in educational programs from workshops to conferences and our virtual National Whistleblower Day celebration that touched thousands worldwide. NWC’s efforts communicating with the SEC have resulted in improvements to the whistleblower program for the second year in a row.
NWC has had a positive impact on over 5 federal bills including whistleblower protections, provided three days of programming for National Whistleblower Day, and hosted 6 panels on whistleblower issues throughout the year. Our subscriber numbers across platforms continues to increase which means that more people are learning about whistleblowers every day. Further, our work has obtained global attention. NWC was invited to participate in the World Justice Forum, IX Summit of the Americas, and International Anti-Corruption Conference among others.
NWC’s outreach efforts have been highly successful in 2022. NWC has amplified the value of whistleblowers and garnered attention from major outlets such as the Wall Street Journal, PBS, and the Harvard Political Journal, to name a few. The success of the Dodd-Frank programs outlined here with record numbers of tips to each program shows that whistleblowing is becoming increasingly normalized and rewarded. NWC’s work is supported by our subscribers and donors. Please consider contributing to our annual fundraising efforts. Our goal is to raise $20,220 and you are the key to our success.
Thank you for reading!