The annual report released by the SEC Office of the Whistleblower for the 2015 fiscal year showed an increase in Foreign Corrupt Practices Act (FCPA) whistleblower tips in FY15, but fewer tips overall from abroad.
The number of tips submitted annually concerning FCPA violations has increased every year since the first full year of data, 2012. In total, the SEC has received tips for over 500 individual cases of possible FCPA violations, totaling 14,116 whistleblower tips, since the inception of the program in 2011. In FY15, tips came in from every state, Washington, D.C., and 61 foreign countries.
Since the beginning of the whistleblower program, awards have been made to twenty-two individuals in connection with sixteen covered actions, as well as in connection with several related actions. There is no requirement that an individual be a current or former employee to be eligible for an award; however, almost half of all award recipients were current or former employees of the company in which they reported information of wrongdoing.
Of the award recipients who were current or former employees, approximately 80% said they raised their concerns internally to their supervisors or compliance personnel, or understaff that their supervisor or relevant compliance personnel knew of the violations, before reporting their information of wrongdoing to the Commission.
China and India have been on top of the leaderboard of countries for whistleblowers each year. Brazil has been able to remain outside the list of Top Five “whistleblower countries,” but the whistleblower count has doubled as a result of intense investigations into corruption since the allegations of bribery at Petrobras. Tips received from Russia, who is facing Western sanctions over their Crimea actions, actually declined in FY 2015.
The volume of tips remained relatively steady throughout the year, with the highest number of whistleblower tips received during March, August, September, and October. It is possible that the program received a boost from the Alstom settlement with the DOJ in December and the incentive of the largest award to date under the whistleblower program, a $30 million reward from the SEC, to an international whistleblower in September.
The most common complaint categories reported by whistleblowers included Corporate Disclosures and Financials (17.5%), Offering Fraud (15.6%), and Manipulation (12.3%). The type of securities violations reported by whistleblowers has remained generally consistent over the last four years. Since the inception of the program, those three categories have consistently ranked as the three highest allegation types reported by whistleblowers.
While each state had at least one whistleblower submission, the highest number of whistleblower tips came from some of the largest and most populous states – California (646), New York (261), Texas (220), Florida (220), and New Jersey (146).
Although the total tip submission count increased to almost 4,000 in FY15 and the SEC places a high value on protecting whistleblowers from retaliation, the SEC experienced a decrease in the number of international whistleblowers willing to provide tips. Foreign complaints primarily came from the United Kingdom (72), Canada (49), China (43), India (33), and Australia (29).
With the rate of whistleblowers continuing to increase, a vibrant compliance program is essential. Compliance officers must be aware of what is happening within their company and be receptive to issues employees raise. An ounce of prevention is worth a pound of cure.
It would be interesting to know if people that gave whistleblower tips from foreign countries are protected by the same laws that whistleblowers in the United States are. As this author states here: http://www.sattirajulawfirm.com/new-jersey-whistleblower-defense-lawyer/ there are more than 20 laws under OSHA that protect whistleblowers in the states. If a foreigner suffers some backlash from an employer, would he/she be protected?