As part of the Dodd-Frank Act, signed by President Obama on July 21, 2010, the Securities and Exchange Commission (SEC) was required to amend the Securities Exchange Act of 1934, to establish a separate office within the SEC to administer a whistleblower program. On May 25, 2011, the amendment was finalized. On August 12, 2011, the Office of the Whistleblower in the Division of Enforcement went live.
Results are as follows -
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"Annual Report on the Dodd-Frank Whistleblower Program" (November 2011) - For the two months of
operations in 2011, 334 tips were received. Top three issues - Manipulation (16.2%); Offering Fraud (15.6%) and Trading Pricing (5.1%). - "Annual Report on the Dodd-Frank Whistleblower Program" (November 2012) - For the twelve months of operations in 2012, 3,001 tips were received. Top three issues - Corporate Disclosure and Financials (18.2%), Offering Fraud (15.5%) and Manipulation (15.2%).
One year after the start of the program -- "SEC Issues First Whistleblower Program Award - Washington, D.C., Aug. 21, 2012 - A whistleblower who helped the Securities and Exchange Commission stop a multi-million dollar fraud will receive nearly $50,000 — the first payout from a new SEC program to reward people who provide evidence of securities fraud."
The questuion I posed above really can not be answered. How do you measure success? If next year we find that 300 awards were granted (10% conversion), can we say the program is a success as we have identified dishonest situations, based on Tips.. Conversely, if we only identify three situations, can we say the program is a success as it deters the defrauding of investors?
What are your thoughts?
