Whistleblower Firm Launches SEC and CFTC Award Order Indexes
Kohn, Kohn & Colapinto LLP, a leading whistleblower firm located in Washington, D.C., has launched two indexes tracking the 700+ whistleblower award orders published by the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
Since the Dodd-Frank Act was passed in 2010 and established both of these highly successful programs, over $9 billion has been collected as sanctions in whistleblower-triggered cases. Of that, over $2 billion has been returned to whistleblowers via financial awards.
The SEC and CFTC Whistleblower Program provides monetary awards to eligible securities and commodities fraud whistleblowers whose information leads to successful enforcement actions resulting in total monetary sanctions of at least $1 million. The amount of the award can range from 10% to 30% of the total sanctions collected.
The SEC and CFTC rules outline the procedures for filing and obtaining these awards, which begins with a Tips, Complaints, and Referrals (TCR) Form. Once the Covered Action is published by the SEC or CFTC, whistleblowers involved in the Action can fill out the respective WB-APP form stating their case for why they qualify for an award. The agency will later post their determinations, which are heavily redacted in order to protect the identity of the whistleblower.
As part of its pro bono efforts, KKC has categorized each whistleblower award and denial order from the SEC and CFTC. This includes tracking the additional award factors that may have increased or decreased a whistleblower’s allotted award payment and noting any case in which a requested waiver was granted or denied. The entity in which a whistleblower disclosed their information is also listed, which includes other government agencies, internal compliance, the media, and more. Any issue discussed or factor that makes the determination unique will be included in the Notes section. The index also links to media coverage of the awards and denials both by KKC and by the agencies themselves.
“This index should serve as an invaluable resource to whistleblower attorneys, whistleblowers who represent themselves, and potential informants for securities and commodities violations worldwide,” said KKC Founding Partner Stephen M. Kohn, who has written extensively on these Dodd-Frank programs in his latest book, Rules for Whistleblowers.
“The SEC follows their own precedent in approving and denying awards,” Kohn continued. “Some of their interpretations are counter to the plain meaning of the Dodd-Frank Act, but this index will allow whistleblowers and their advocates to understand how the Commission staff views the law and has ruled on certain circumstances in the past.”
The indexes will be updated regularly to reflect any new determinations by the SEC and CFTC.
Two bipartisan bills are currently making their way through Congress, aiming to strengthen both the SEC and CFTC award programs. The SEC Whistleblower Reform Act of 2023 and CFTC Whistleblower Fund Improvement Act of 2023 were both introduced by long-time whistleblower advocate Senator Charles Grassley (R-Iowa), who reaffirmed his strong support of whistleblowers in celebration of National Whistleblower Day.
The SEC bill looks to improve conditions for internal whistleblowers who report to corporate compliance, address the programs long delays, and make sure that nondisclosure agreements do not silence whistleblowers.
The CFTC bill increases the cap on the Customer Protection Fund to $300 million, ensuring that the program will have cash without making new authorizations or expenditures of taxpayer dollars. The Act also makes the CFTC Fund Management Act, a short-term fix passed in 2021, permanent.
Kohn describes these reforms as “urgently needed” in order to make these already successful programs even stronger for the whistleblowers who report under them.
