22 Nov, 2012

Whistleblowers from the UK were responsible for almost one in four (23 per cent) overseas tip-offs to the US Securities and Exchange Commission (‘SEC’) in the last US fiscal year, according to analysis1 from Kroll Advisory Solutions, the global investigations firm.


The Securities and Exchange Commission (SEC) made its first payment to a whistleblower under the Dodd-Frank Act in August this year, releasing around $50,000 to an individual who helped an investigation that resulted in more than $1 million in sanctions. Kroll says that payouts such as these will encourage more whistleblowers to come forward to the US regulator in search of bounties, as the rewards on offer have no jurisdictional limits as long as the case has a negative impact on US financial markets.


Kroll’s analysis of the SEC’s annual report on its whistleblower program1 reveals that of 3,001 tip-offs received in total in the past year, 324 came from outside the US. Whistleblowers based in the UK were responsible for 74 of these, more than any other country and substantially more than Canada, which is in second place with 46 tip-offs, 14 per cent of all those from outside the US.


Whistleblowers from India were responsible for 33 tip-offs (10 per cent), ahead of China with 27 (8 per cent) and Australia with 21 (6 per cent).


Benedict Hamilton, a Managing Director at Kroll, said: “The bounties offered to whistleblowers by the SEC are likely to have huge repercussions for companies, particularly international ones, as they mean whistleblowers based anywhere in the world are more likely to go to the regulator rather than their company in the hope of being awarded a large payout.


“At the moment UK regulators don’t offer similar rewards but the Financial Services Authority has been asked to consider the approach by the Parliamentary commission on banking standards. We have already seen a sharp rise in whistleblowing tip-offs to the regulator in the last few years and the offer of rewards would almost certainly accelerate this trend.


“This reinforces the need for companies to have robust whistleblower procedures in place to find out about any malpractice being carried out by their employees as early as possible and react quickly to limit financial and reputational damage, and where appropriate, recover or avoid losses.”


Top 5 non-US sources of whistleblower tip-offs to the SEC, fiscal year 2012


Number of tip-offs received

Percentage of all non-US tip-offs from this country

United Kingdom















Source: Kroll Advisory Solutions analysis of SEC Annual Report on Dodd-Frank Whistleblower Program


In October, information2 obtained under the Freedom of Information Act by Kroll revealed that whistleblowing cases reported to the FSA increased by 276 per cent in four years. The findings revealed that between June 2011 and May 2012 the FSA received 3,733 contacts to its whistleblowing helpline, compared to 994 calls made in the same period four years earlier (June 2007-May 2008).


Kroll says that over the last 12 months almost one in five (18 per cent) of its investigations were prompted by a whistleblower3. In 60 per cent of these investigations the original allegations were upheld, while 19 per cent stemmed from malicious allegations made intentionally to get revenge on an individual or company.


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