Tuesday 16 October 2018

US securities watchdog reveals tip-offs from 12 Irish-based whistle-blowers

SEC chairman Jay Clayton
SEC chairman Jay Clayton
John Mulligan

John Mulligan

Twelve individuals based in Ireland were among those who acted as whistle-blowers to the US Securities and Exchange Commission (SEC) last year as the watchdog continues to hand over tens of millions of dollars to people who reveal securities violations resulting in successful prosecutions.

The SEC revealed in its latest whistle-blower annual report to the United States Congress that of the more than 500 whistleblower tips it received from sources outside America during its 2017 financial year, a dozen originated in Ireland.

The SEC does not indicate whether tips received from any particular country resulted in successful prosecutions.

The annual report also shows that the SEC received 84 tips from people based in the UK. That was the single biggest number received from any country outside the United States. From within the United States and its territories, the financial watchdog, headed by Jay Clayton, received more than 3,100 tips.

The US whistle-blower programme was launched seven years ago in an effort to root out violations of securities laws.

A key part of the programme is that whistle-blowers can share in the proceeds of fines and disgorgement paid by companies and individuals as a result of successful prosecutions in which they have played a role. The identity of the whistle-blowers and the companies or individuals on which they reported, are kept confidential.

But only a tiny proportion of the whistle-blowers who provide tips to the SEC ever receive a payment.

The whistle-blower annual report notes that in the last financial year of the programme, just 12 individuals received a payment under the scheme. But the amount paid totalled almost $50m (€42.4m).

"Since the agency issued its first award in 2012 through the end of September 2017, the programme has awarded approximately $160m (€135.6m) in whistle-blower awards to 46 individuals whose information and co-operation assisted the agency in bringing successful Commission enforcement actions and related actions brought by non-SEC enforcement authorities," the annual report noted.

The SEC also pursues legal action against companies or individuals who attempt to unmask the identity of whistle-blowers, or to impede employees or former employees from contacting or collaborating with the SEC.

The whistle-blower programme is operated under the Dodd-Frank financial reform act that was introduced in 2010. US President Donald Trump has attempted to row back the act, describing it as a "disaster".

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