As part of the much-discussed Dodd-Frank Act of 2010, Congress launched the SEC Whistleblower Program to entice employees to come forward with credible evidence of securities fraud. With the Program offering 10% to 30% of a penalty of a securities violation in excess of $1 million, many fraud-fighting experts predicted that the SEC Whistleblower Program would quickly surpass the annual recoveries of the federal False Claims Act.
In reality, though, the SEC Whistleblower Program has not taken off as expected. In fact, only thirty-three whistleblowers have received rewards of any size in the past six years, and the vast majority of these rewards have been in the 5-figures. Moreover, the annual recoveries from SEC Whistleblower tips have been well under $100 million. Needless to say, if this trend continues, potential SEC Whistleblowers and their attorneys will not utilize the Program, to the detriment of the market and individual shareholders.
However, there is reason to believe that the SEC Whistleblower Program is now taking flight. Most notably, the two largest SEC Whistleblower rewards have been paid in the past 24 months, and the number of annual SEC Whistleblower rewards have already hit an all-time high in 2016.
In addition, SEC Chairwoman Mary Jo White has touted the SEC Whistleblower Program as a “game changer” that is “providing a source of valuable information” to help the SEC with its mission.
This is good news for healthcare employees who are considering the SEC Whistleblower Program. Indeed, with the rapid consolidation of health systems and pharmaceutical and medical device manufacturers, much of the power now resides in the hands of a few publicly traded companies. Undoubtedly, a percentage of these companies are engaged in actions that run afoul of the securities laws. With a maturing SEC Whistleblower Program, their high-level employees might now step forward with actionable evidence of fraud.