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SEC: More FCPA whistleblower tips in FY2015, but fewer tips overall from abroad

The SEC received 16 percent more tips from whistleblowers concerning suspected violations of the Foreign Corrupt Practices Act in fiscal year 2015 than it did the previous year, according to the annual report released by the SEC Office of the Whistleblower.

The SEC has now received more than 500 tips on potential FCPA violations since creating its whistleblower program in 2011.

The number of tips submitted annually concerning FCPA violations has increased every year, reaching 186 in the last fiscal year from a start of 115 in the first full year of data (FY 2012).

However, no conclusions can be drawn about bribery by U.S. issuers from this data yet because submissions have increased across the board as word spreads about the financial incentives authorized by the Dodd-Frank Act in 2010.

Of the countries leading the FCPA Blog’s Corporate Investigations List (October 2015), China and India have been among the top five countries for whistleblowers each year. Brazil, a hotbed of investigations into corruption since the allegations of bribery at Petrobras came to light, saw its whistleblower count double although it remained outside the top five countries. Tips received from Russia — which is facing Western sanctions over Crimea — declined, with only six in fiscal year 2015.

The SEC received the most tips concerning the FCPA in the first and second quarters. The program could have received a boost from the news about the record Alstom settlement with the Justice Department in December and the $30 million reward from the SEC to an international whistleblower in September.

There were significantly fewer tips concerning the FCPA in the second half of the year.

Although the total submission count increased to nearly 4,000 and the SEC took significant steps to protect whistleblowers during the course of the year, the SEC also experienced a decrease in the number of international whistleblowers providing tips compared to the prior fiscal year.

Only 421 individuals were located outside of the United States, according to the data whistleblowers disclosed to the SEC. In fiscal year 2014, there were 448 individuals reporting their country as outside of the United States.

The year-over-year decrease followed the decision in Liu v. Siemens AG, where the Second Circuit Court of Appeals held that Congress did not intend for the Dodd-Frank protections against retaliation to apply extraterritorially. This is unfortunate for whistleblowers, who will have to await further judicial decisions to determine the extent these protections apply in cases that straddle the boundary between domestic and foreign conduct.

Shortly after the Liu decision, the SEC reaffirmed its authority to pay rewards to individuals who are located overseas when it issued its largest award ever to an individual outside of the United States.

In the 2015 annual report, the SEC also released more data about the cases and information that have resulted in rewards, including the breakdown between awards for providing information about new cases and significantly contributing to existing cases. The awards so far have been roughly split in half between these two categories, which suggests that FCPA whistleblowers could come forward even after the U.S. government has become aware of potential problems at a company and is pursuing an investigation.


Eric Young is the head of the whistleblower practice at McEldrew Young, a Philadelphia law firm representing SEC whistleblowers.

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