The Fraud Examiner

COVID-19 Pressure-Tests Whistleblower Hotlines Worldwide
 

Jeffrey Matthews, CFE     
Partner
StoneTurn
                               


Despite the many challenges that anti-fraud professionals have faced during the coronavirus crisis ꟷ remote investigations, virtual due diligence and cross-border data collection and protection regimes to name a few ꟷ fraud hotlines, our most effective anti-fraud measure, seem pandemic-proof. In fact, the U.S. Securities and Exchange Commission’s (SEC’s) Whistleblower Program continues to break records in both the number of tips received and money awarded in fiscal year 2020 (see chart below).

The SEC has added staff and increased the use of resources across multiple divisions in an effort to manage the flow of whistleblower information and maintain efficiency.


Fraud

In addition to the lure of a hefty payout, such as the $114 million awarded in October (more than doubling the previous highest amount), Anita Bandy, the associate director for the enforcement division of the SEC, notes that a rise in complaints in times of market disruption or volatility is nothing new. The Office of the Whistleblower experienced a similar rise in complaint levels during the financial crisis of 2008-2009, in which the resulting economic recession revealed a nearly 20% increase in financial fraud schemes.

Further, SEC officials report that of the 69% of insiders paid in fiscal year 2020, 85% raised their concerns internally before reporting to the SEC. These statistics aid in uncovering the three primary factors behind an overall uptick in whistleblower claims:


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