Report From SEC’s Office Of The Whistleblower – Sean McKessy

Two years after the opening of the SEC’s whistleblower office, Division Head Sean McKessy provides an interview outlining the success of the program as well as the future direction of the program. In 2012 alone, the SEC received 3,001 whistleblower tips. Though the statute has only seen four payouts since its inception July 21, 2010, McKessy predicts more are in the future. As the SEC gets further out from the inception of the statute, more of these tips will lead to investigations, recoveries and eventually payouts. Currently, the SEC has approximately 50 lawyers, accountants and market professionals who read through the tips and determine if there is merit for further enforcement resources.

In terms of payouts, McKessy explained the SEC’s method for determining Relators share. The rules for awards set forth various eligibility criteria. The SEC’s first award granted the Relator a full 30% share of the SEC’s recovery whereas in the case of the second award, the whistleblowers received a 15% share. McKessy explained the difference between the awards. Whereas the first whistleblower was the “paradigm” of an ideal whistleblower, the whistleblowers in the second matter were not in a position to provide continuing assistance to the SEC and as a result, received a lesser share.

Currently, the SEC is working on a number of matters that may include claims under the anti-retaliation whistleblower provision of the Dodd-Frank act and they are similarly interested in stand-alone retaliation claims.

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