Whistleblowing Developments: Background and Current Landscape (Part 1)

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Litigation Partner Kamil Shields and Litigation Associate Sabrina Solow, discuss a range of whistleblowing developments.

They touch on the recent downward trend in SEC whistleblowing enforcement and contrast that against the opposite trend under other programs, in part driven by a growing focus on whistleblowers as a potential means of pursuing investigative priorities.

A preview of the conversation can be found in the Q+A below.

Sabrina: Kamil, can you start us off with brief background?

Kamil: In the U.S., there are a variety of avenues for a whistleblower to consider.  For example, the SEC, Federal Reserve, CFTC, and a provision of the False Claims Act have long provided an avenue for whistleblowers to come forward. More recently, DOJ Criminal and DOJ Antitrust have developed respective whistleblowing programs.

Sabrina: We’ve been seeing an incredible amount of coverage on whistleblowing cases, regimes, and proposed legislation.  But against this background of heightened attention to whistleblower activities, we are seeing a downturn in SEC awards.  Annie, can you give some background?

Annie: As reported in the past couple of weeks, the SEC has denied over 30 consecutive awards this year between late-April and mid-July. In fact, only about $20 million has been awarded this year.  Although we’re only a little more than halfway through the year, that is a drop in the bucket compared to last year, when the agency awarded over $255 million to 47 individual whistleblowers. This may reflect a change in approach and priorities at the SEC. For example, under the last administration we saw a significant uptick in SEC enforcement actions related to the SEC whistleblower protection rule, Rule 21F-17. Under the current administration, however, we have not seen any SEC whistleblower rule enforcement actions to date.