The International Scope of the United States SEC’s Whistleblower Program and What It Means for Multinationals

January 05, 2017

As in recent years, the U.S. Securities and Exchange Commission (SEC) continues to aggressively pursue enforcement actions. One of the most powerful and effective tools in its arsenal is the Dodd-Frank Whistleblower Program. For multinationals, this is an unmistakable call to ensure that there are proper policies and procedures in place to appropriately address whistleblower complaints, whether they originate in the U.S. or abroad. 

Background to the SEC’s Whistleblower Program 

The Whistleblower Program was established on July 21, 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed. Under the program, an “eligible whistleblower” is one who voluntarily provides the SEC “with original information about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur.”1 A whistleblower must be a natural person; companies or organizations cannot qualify as whistleblowers. The program encourages individuals to report possible violations of the federal securities laws to the SEC by providing monetary incentives. Accordingly, as long as the monetary sanctions collected exceed US$1 million, whistleblowers are entitled to 10 to 30 percent of the monetary sanctions that the SEC or other regulatory and law enforcement authorities collect as a result of whistleblowers’ tips.2 The Whistleblower Program also protects whistleblowers from retaliation by employers.3 

The Scope of the Whistleblower Program 

The Whistleblower Program has been a considerable success both for the SEC and for whistleblowers. As Jane Norberg, Chief of the SEC’s Office of the Whistleblower, recently explained, the program has had a “transformative effect” on the enforcement activity of the SEC.4 Since its inception, the SEC has collected sanctions totaling over US$584 million5 from 34 whistleblowers to whom it has in turn paid US$111 million under the program.6 Of the US$111 million paid out to whistleblowers, more than half i.e. over US$57 million was paid out in 2016 alone, including six of the ten highest whistleblower awards ever made under the program.7 Since 2011, the SEC has received over 18,000 tips from would-be whistleblowers and the number of tips continues to increase every year. In 2011, the SEC received 334 tips. Five years later, the SEC has received 4,218 tips from whistleblowers in 2016.8 

International Implications of the Whistleblower Program 

Although the majority of tips are currently from U.S.-based whistleblowers, the relevance of the Whistleblower Program to companies abroad cannot be understated. In 2016, the SEC received 464 whistleblower tips—10 percent of the year’s total to date—from whistleblowers abroad.9 Of these tips, 238 relate to alleged violations of the Foreign Corrupt Practices Act (FCPA), which is an increase of 28 percent from the year before.10 The foreign whistleblowers’ tips originated from 67 foreign countries spread across all continents, including:11 

  • 68 whistleblower tips from Canada 
  • 63 whistleblower tips from the United Kingdom 
  • 53 whistleblower tips from Australia 
  • 35 whistleblower tips from China 
  • 20 whistleblower tips from India 

If the rapid increase in whistleblower tips across jurisdictions is any indication, the number of tips from whistleblowers abroad will only continue to increase. 

Best Practices and Recommendations for Corporate Compliance Programs 

Around the world, corporate insiders are taking note of the significant awards issued by the SEC and are more willing than ever to report their perceptions of corporate misconduct. The best approach for companies is a proactive one. In order to mitigate the likelihood of a would-be whistleblower escalating complaints to the SEC or other governmental authorities, internal complaints or allegations of misconduct must be properly recorded, investigated and dealt with internally. In short, companies must implement appropriate policies and procedures. Such policies and procedures can be implemented in various ways, but must incorporate the following at minimum: 

  • Convenient and confidential channels for employees to report concerns and complaints; 
  • Proper recordkeeping and tracking of complaints from initial report to resolution; 
  • Pre-existing protocols setting forth how to properly engage whistleblowers, investigate allegations of misconduct and when to retain external counsel; 
  • Well-trained staff empowered to independently identify misconduct and thoroughly investigate complaints, possibly in conjunction with external counsel; 
  • Proper documentation of the results of investigations, including any remedial measures adopted in response; and 
  • Well-designed internal controls to reduce the incidence of complaints and reduce the likelihood of retaliation against complaining employees. 

Even when such programs and procedures are properly implemented, a company may not be able to completely avoid whistleblower complaints. Companies with established policies and procedures regarding intake, investigation and resolution of whistleblower complaints will be best positioned to defend themselves against government investigations, however. Moreover, such efforts will likely be favorably viewed by enforcement authorities and may reduce the likelihood and amounts of any monetary sanctions or even eliminate the possibility of enforcement actions altogether. A comparison of the number of whistleblowers paid under the program to the sheer number of whistleblower reports indicates that not all complaints will result in enforcement actions and sanctions.12 As in other contexts, preparation is key. 

In the alternative, companies that fail to implement proper policies and procedures regarding whistleblower complaints are at the greatest risk of whistleblower complaints being improperly handled by personnel or materializing into enforcement actions. In September 2016, a multinational beverage producer agreed to pay US$6 million to the SEC as settlement of its FCPA violations. In addition, the SEC mandated that the beverage producer cooperate with the SEC and report its FCPA compliance efforts for two years while making reasonable efforts to notify certain former employees that it does not prohibit employees from contacting the SEC about possible law violations. In the press release, the SEC made clear that the culpability of the beverage producer was exacerbated by its attempt to dissuade an employee from communicating with the SEC on the particular matter that ultimately gave rise to the SEC’s charge. As the provisions of the Whistleblower Program and the SEC’s Jane Norberg recent comments make clear, any threats of punishment against would-be whistleblowers for making complaints are unacceptable. Considering that the actions of a small number of poorly-trained or misguided employees against a potential whistleblower may constitute retaliation, it is important that companies ensure all of their employees are well trained. 


The SEC’s Whistleblower Program has been a resounding success for the SEC—and an unmistakable call to action for companies. The program enables the SEC to access otherwise elusive evidence of misconduct from around the globe and penetrate the innermost workings of companies with the assistance of these companies own insiders. The steady increase in the number of received whistleblower tips since the inception of the program in 2011 and the corresponding increase in enforcement actions, monetary sanctions and whistleblower awards all indicate that the SEC will continue to rely heavily on whistleblower tips for its future enforcement. It is clear that, more than ever, companies must be prepared and prioritize putting in place the right policies and procedures to address complaints properly and effectively both domestically and abroad. 


1) SEC Office of the Whistleblower FAQ.
2) Id.
3) See Section 922h of the Dodd Frank Act, 15 U.S.C. § 78u-6(h)(1)(A). It is not clear whether individuals who report violations while located outside the United States are protected by Section 922’s anti-retaliation provisions. The language of Section 922 is silent on this issue, stating only that “[n]o employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower….” Some courts have ruled that foreign whistleblowers are not entitled to Section 922(h)(1)(A)’s protections. See, e.g., Liu v. Siemens A.G., 763 F.3d 175 (2d Cir. N.Y. 2014). The issue is far from settled, however, and multinational companies would be well advised to handle foreign whistleblowers with as much care as domestic whistleblowers.
4) See 2016 Annual Report to Congress on the Dodd-Frank Whistleblower Program.
5) Id.
6) Id. Recent reports indicate that, since the 2016 Annual Report to Congress was issued in November 2016, the number of whistleblowers paid under the program may have increased to 36 and the total value of the amounts paid out may have increased to approximately $135 million. See
7) See 2016 Annual Report to Congress on the Dodd-Frank Whistleblower Program.
8) Id.
9) Id.
10) Compare 2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program which recorded 186 FCPA-type allegations in 2015.
11) See 2016 Annual Report to Congress on the Dodd-Frank Whistleblower Program.
12) See Order Determining Whistleblower Award Claims (denying two whistleblowers’ claims). Note, however, that the SEC authorized a $3.5 million award to a third whistleblower.

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