The SEC recently reported that FY 2015 brought a new high for whistleblower tips regarding FCPA violations. The SEC received 186 tips related to alleged FCPA violations in FY 2015, a 17% increase from the 159 such tips in FY 2014. Kara Brockmeyer, Chief of the SEC's specialized FCPA Unit, reiterated in November 2015 that the Dodd-Frank whistleblower incentive provisions have been a “game-changer” for FCPA enforcement.
Last week, I hosted a webcast on "Navigating the Minefield of Dodd-Frank’s Whistleblower Provisions and the FCPA." The webcast featured three leading attorneys in the FCPA and whistleblower practice area (F. Joseph Warin and John W.F. Chesley of law firm Gibson, Dunn & Crutcher, and Erika Kelton of law firm Phillips & Cohen).
Looking at the first four years of whistleblower awards, the panel made several interesting observation, including:
more than $54 million has been awarded to 22 individuals -- including $30 million to a single whistleblower;
roughly half of the successful tips leading to awards caused new investigations to be opened, with the other half significantly advancing pre-existing investigations;
roughly half of the awardees were employees of the company subject to the enforcement action, and 80% of these employees first reported the misconduct internally;
six of the 22 awardees were foreign-based; and
the amount of the awards to approximately 20% of the awardees was reduced due to unreasonable delays in reporting.
The panel also looked at several key issues in the whistleblower area that are now being litigated, including:
Must one report to the SEC to be a Dodd-Frank whistleblower? The presentation materials provide cites to over 20 federal court decisions on this issue, including two court of appeals decisions (2nd Circuit and 5th Circuit);
Does Dodd-Frank apply extraterritorially? The three courts that have addressed this issue have all held that it does not.
In addition, the panel offered numerous key takeaways for compliance professionals, including the need to review corporate confidentiality provisions and internal compliance processes, the need to adjust the voluntary disclosure calculus, and the importance of the attorney-client privilege in determining whether to engage counsel for internal investigations.
You can check out the complete webcast below.