(LEGAFI) -- Last week the Securities and Exchange Commission (SEC) issued a report detailing the past year's activity under the new Whistleblower Program enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in July 2010. One of the most interesting details from the report is how many people have used the SEC's whistleblower hotline to report SEC and securities violations since it was established in May.

 

According to the report, the SEC has received over 900 calls from members of the public in the six short months the whistleblower hotline has been in place. Of those, 334 were received between the time the new whistleblower rules went into effect on August 12, 2011 and the the end of the fiscal year, September 30, 2011.

 

The whistleblower protections enacted under the Dodd-Frank Act greatly expand the protections created under the Sarbanes-Oxley Act (SOX), including providing a less heightened burden of proof for the employee. Most notably, however, is that whistleblowers who voluntarily report to the SEC "original information" that leads to a successful recovery will be eligible for an award of 10% to 30% of the collected money sanctions in excess of $1 million. Previously, there had been a cap of 10% of the award.

 

The enhanced Dodd-Frank whistleblower provisions appear to have led to a notable increase in financial sector employees reporting a wide variety of security violations to the SEC.

 

Jordan A. Thomas, who during his recent tenure at the SEC helped craft the whistleblower program and is now Chair of the Whistleblower Representation practice at Labaton Sucharow LLP, predicts the SEC will break all prior records for the number of enforcement actions and monetary sanctions it will make thanks to the new Dodd-Frank provisions.

 

"The SEC report does a good job of educating the public on the new whistleblower program. However, what it fails to do is highlight the high-quality of the whistleblower submissions that have been received over the last year. In fact, an extraordinary high percentage of these tips have led to investigations. In the coming years, I predict -- admitedly an educated guess -- that many of the SEC's most significant cases will be the result of whistleblowers," said Thomas.

 

The SEC reports that the most common whistleblower complaints received last year include market manipulation, corporate disclosure and financial statements, and offering fraud.

 

Submissions have come in from 37 states and numerous international jurisdictions, including high concentrations in China, Australia and the UK.

 

"Given the global nature of business, it's not surprising that we're seeing tips from outside of the U.S.," said Thomas.

 

"In creating this innovative program, the federal government recognized that law enforcement authorities cannot effictively and efficiently police the marketplace without the assistance of private individuals and entities," he adds.