Clifford Chance

The SEC's annual Enforcement Results for FY22 reflect continuing trends for whistle-blowers and awards.

On November 15, 2022, the SEC again highlighted its whistle-blower program in its annual Enforcement Results release for FY22. In announcing the results, the SEC highlighted the facts that the SEC received a record breaking 12,300 whistle-blower tips and distributed approximately $229 million in 103 awards.

The SEC's release also discussed enforcement actions against companies and individuals that potentially impede whistle-blower reports or retaliate against whistle-blowers. The highlighted cases included: (i) a successful enforcement action against a company that required employee's to sign restrictive covenants; (ii) a contested enforcement action against an investment adviser that required investors to sign agreements prohibiting disclosures to the SEC; and (iii) an enforcement action against a technology company co-founder who retaliated against a whistle-blower. The SEC's decision to highlight these cases—which is consistent with its FY21 release—reinforces the SEC's message that it will bring enforcement actions both for substantive violations and for whistle-blower retaliation.

The FY22 whistle-blower statistics are consistent with expectations that a combination of ongoing awareness of the SEC's program as well as COVID/"work from home" could lead to an uptick in tips. Given the current economic outlook, it should not be a surprise if the FY23 SEC Enforcement Results further amplify these trends.

We continue to track these developments along with the development in the EU associated with the implementation (and delayed implementation) of the EU Whistle-blower Protection Directive given the impact both will have and continue to have on companies who should be focused on shoring up their compliance frameworks both to identify misconduct first and to avoid missteps when whistle-blowers come forward.