In a recent blog post, we discussed poignant areas for 2021, due to the fluidity and lessons learned this year. As we all know, 2020 has changed the mindset and strategies for all business and the team at Core Compliance would like to continue the discussion in a short- series of what we believe firms should consider as we approach the new year.
This blog post focuses on the banner year for whistleblowing and the findings within the SEC's Division of Enforcement’s Annual Report.
Indeed, there has never been a better time to be a whistleblower. Established as part of the Dodd Frank Act of 2010, the SEC Whistleblower Program awarded 106 whistleblowers a record $562 million during the period covered by the SEC report. The increasingly successful and very popular program fully protects the identity of whistleblowers who file reward claims. It offers awards between 10% and 30% of the sanctions collected from enforcement actions if the monies exceed $1 million.
“From my viewpoint , I know that the whistleblower programs used by the SEC and by individual companies are a vital tool to identify wrongdoing,” said James L. Smith, Senior Compliance Consultant for Core Compliance & Legal Services, Inc. “Ideally, people do not want to be viewed as a snitch, so to speak. But like anything else, the more something is done and the more it is refined, the more acceptable it becomes.”
In another noteworthy development, the median time between the alleged conduct underlying an investigation and how long it took the SEC to file charges has dropped to a five-year low of 21 months. The SEC said the average length of financial fraud and issuer disclosure investigations it conducted also dropped to 34 months from 37 last year.
“The SEC has accelerated the pace of their investigations while they continue to focus on fraud and disclosures,” Smith said. “They are also focusing on fee transparency, conflicts of interest and associated disclosure, and fiduciary responsibility, especially as it relates to investment advisers.”
As we all grow closer to year-end, firms - now more than ever - must implement the lessons of 2020 to 2021. The Industry can agree that the most important lesson is to be prepared, especially in the current fluid market. The Core Compliance Team is always ready and available to assist you and your firm assess the strength of your compliance program, especially during year-end. If you or your firm would like any assistance or additional Information, please contact us here or at 619.278.0020.
Be on the lookout for our upcoming blog post where we discuss additional helpful hints for 2021.