updated 2:28 PM CEST, May 24, 2023

Focus on whistleblowers in Washington, as SEC, CFTC announce latest (un-named) reward recipients

You could almost hear the whistles of the whistleblowers blasting away in Washington this past week, as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) both announced (on the same day) their latest multi-million-dollar awards to un-named individuals who had come forward to quietly inform the authorities of regulatory violations they knew of that were being carried out on a significant scale.

Whistleblowing, it seems, has become an important tool in the U.S. government's compliance arsenal over the 13 years since an American UBS banker named Brad Birkenfeld famously came forward in 2007 to reveal how Swiss banks were enticing wealthy Americans to stash their assets in Swiss institutions, where the country's strict bank secrecy laws meant that they weren't expected to pay tax on it.

Brad Birkenfeld at the National Press ClubBirkenfeld's revelations blew the lid sky high off that type of business, and contributed to calls for change in Washington that led, in 2010, to the signing into law of the Foreign Account Tax Compliance Act, although it didn't come into force until 2014.

The OECD's global program of automatic information exchange, known as the Common Reporting Standard, is also seen to have evolved out of the revelations of Birkenfeld and some other major bank data disclosures around the same time.  

(Birkenfeld, meanwhile, went to prison in the U.S. for two-and-a-half years; was awarded US$104m by the IRS as a percentage of the US$400m in tax money the goverment was able to get back from those whose had been found to be using Swiss accounts to avoid tax; and went on to write a best-seller Lucifer's Banker, based on his experiences.)

Although the sums announced this week by the SEC ("almost US$2m" to a single whistleblower who helped the agency to "bring a successful enforcement action and allowed investors to recover much of their money"), and the CFTC  ("more than US$2m to be shared among four whistleblowers who jointly submitted a tip to the CFTC") aren't in the same league as Birkenfeld's US$100m-plus bundle, observers commenting on the news noted that it showed the extent to which the use of whistleblowers has becoming more established – and acknowledged.

Indeed, as the Wall Street Journal noted in its report on the SEC award on Monday, the SEC's just-unveiled almost-US$2m-award "brings to over US$64m the amount paid to whistleblowers during the first seven months of the fiscal year that began in October – more than the SEC has awarded in any full year except 2018", citing as its source an anlysis of SEC data. 

The 16 whistleblowers who have received money during this period thus far "[also] exceeds the number in any previous year" since the SEC launched its whistleblower program in 2011, the WSJ added.

The article goes on to quote Jordan Thomas, chair of the whistleblower practice at law firm Labaton Sucharow LLP, as saying that the SEC  has been "putting more resources than ever into dealing with [a] backlog" in whistleblower cases, with the result that "we are starting to see the benefit of those resources this year". 

Dealbreaker, a slightly-irreverent online business news website, noted that SEC chairman Jay Clayton seemed to have changed his previously-unenthusiastic attitude towards the SEC's whistleblower program – although it wasn't clear whether it was "a true change of heart due to a realization that whistlelowers can actually be useful, or an ad-hoc stimulus program for out benighted times, or simply SEC bureaucrats' reaction to boredom". (Nor, the Dealbreaker article added, was it clear "just how long the change [of heart on Clayton's part] will last".) 

The day after the SEC and CFTC announced their latest whistleblower awards, meanwhile, the recently-ousted director of a U.S. agency responsible for funding biomedical research into drugs aimed at killing viruses and other disease-causing microorganisms filed an 89-page whistleblower complaint with the U.S. Office of Special Council, according to press reports. In his complaint, which may be seen here,  Rick Bright alleges he was ousted from his job because of his "insistence" that the government spend funds on "safe and scientifically-vetted solutions" to address the coronavirus, and not on "drugs, vaccines, and other technologies...that lacked scientific merit". 

in Expatland

While you might almost be able to hear the sound of the whistleblowers on a quiet day in Washington, and more than 26,000 tip-offs have been received from the fifty U.S. states since 2011 (see map, below), it seems Birkenfeld wasn't the last overseas whistleblower.

According to the SEC, whistleblower tips have also been submitted by individuals from some 114 foreign countries between fiscal years 2011 and 2018.

The country from which the largest number of such tips have come has been the UK, with 523, followed by Canada (446), China (278), Australia (243), and India (213).  

For more information on the SEC's whistleblower program, click here. 

Tips by State












 Source: https://www.sec.gov/page/whistleblower-100million