OIG Report: Evaluation of the SEC's Whistleblower Program

Section 922 of the Dodd-Frank Act required the Office of Inspector General ("OIG") to evaluate the SEC’s Whistleblower Program and answer the following questions. OIG will examine whether:

1. the final rules and regulation issued under the amendments of Section 922 have made the whistleblower protection program clearly defined and user-friendly;

2. the program is promoted on the SEC’s website and has been widely publicized;

3. the SEC is prompt in: a) responding to information provided by whistleblowers; b) responding to applications for awards filed by whistleblowers; c) updating whistleblowers about the status of their applications; and d) otherwise communicating with the interested parties;

4. the minimum and maximum reward levels are adequate to entice whistleblowers to come forward with information and, conversely, whether the reward levels are so high as to encourage illegitimate whistleblower claims;

5. the appeals process has been unduly burdensome for the SEC;

6. the funding mechanism for the Investor Protection Fund established by Section 922 is adequate;

7. in the interest of protecting investors and identifying and preventing fraud, it would be useful for Congress to consider empowering whistleblowers or other individuals, who have already attempted to pursue a case through the SEC, to have a private right of action to bring suit based on the facts of the same case, on behalf of the government and themselves, against persons who have committed securities fraud; and

8. the Freedom of Information Act ("FOIA") exemption established in Section 21 F(h)(2)(A) of the Securities and Exchange Act of 1934, as added by the Dodd-Frank Act,

a) aids whistleblowers in disclosing information to the SEC;b) has had an impact through the FOIA exemption described above on the ability of the public to access information about regulation and enforcement activities of the SEC, and if so, what impact; and c) any recommendations on whether the exemption described above should remain in effect.

This report contains two recommendations that were developed to aid the SEC in establishing performance metrics for key processes in its whistleblower program and to facilitate the SEC’s monitoring of the whistleblower program’s performance.

View Report in full here (links externally to OIG report).