August 29, 2021

Recent whistleblower developments in the US and the international arena

On August 2, 2021, Chairman of the US Securities and Exchange Commission Gary Gensler made a public statement about past and future amendments to the SEC’s whistleblower program rules.  The amendments that were adopted in September 2020 were designed in part to provide transparency regarding the calculation of whistleblower awards.  Since the adoption of the amendments, the SEC has awarded more than $361 million to whistleblowers, including over $16 million in August 2021 alone.  In 2020, the volume of whistleblower complaints, and the number and amount of whistleblower awards by the SEC have increased in almost every geographic location, category of complaint, and sector of the economy.* 

Despite these increases, Gensler noted in his August 2 statement that two SEC Commissioners and members of the public had voiced concerns about some of the changes.  In particular, Gensler stated that the concerns related to a provision that could prevent the SEC from paying awards to whistleblowers if other enforcement authorities could also provide an award and another provision that could allow the SEC to reduce an award because of its size in absolute terms (not as a percentage of the enforcement action amount).  In response to these concerns, Gensler has directed the SEC staff to draft revisions for the Commissioners’ consideration that would allow the SEC to make whistleblower awards when an alternative whistleblower program applies but is “not comparable to the SEC’s program,” and also to make clear that the SEC will not lower an award based on its absolute dollar value.  These revisions, if adopted, could further encourage whistleblowers to come forward.

In developments outside the United States, the International Organization for Standardization, a non-governmental organization that develops international standards to facilitate world trade, published ISO 37002:2021 in July 2021.  The new standard, entitled “Whistleblowing management systems – Guidelines,” provides guidance on implementing, managing, evaluating and maintaining an effective whistleblower program.  The guidance offered by the new standard is subdivided into four stages:  (1) receiving, (2) assessing and (3) addressing reports of wrongdoing, and (4) concluding whistleblowing cases.  The standard is meant to apply to all types and sizes of organizations.
*The SEC’s 2020 Annual Report to Congress on the Whistleblower Program is available here.

SEC statement | ISO 37002:2021 (abstract) | BSI news release