By all accounts, 2014 was a year of tremendous success for the SEC’s Dodd-Frank Whistleblower Program. According to its 2014 Annual Report to Congress on the Dodd-Frank Whistleblower Program, the SEC paid nine whistleblower awards, including a record $30 million award to a single whistleblower. SEC’s 2014 Annual Report to Congress on the Dodd-Frank Whistleblower Program. Sean X. McKessy, the Chief of the Office of the Whistleblower, told Congress that these awards exceeded the number of awards made “in all previous years combined.” In addition, the SEC brought its first enforcement action under the anti-retaliation provisions of the Dodd-Frank Act.

The Annual Report offers more than just numbers, however. Without disclosing whistleblower identities, the Annual Report provides a “profile” of award recipients. Notably, more than 40% of the individuals who received awards were current or former employees of the company about which they reported. In addition, 80% of the individuals had raised issues internally prior to submitting information to the SEC, but the company failed to “take steps or remedy” the misconduct. Other award recipients included the actual victims of the fraud, individuals who had a “personal relationship” with the perpetrator, and contractors and consultants that worked with the company about which the report was made.

The Annual Report also reflects an increase in the number of whistleblower complaints in general. Complaints related to “Corporate Disclosures and Financials (16.9%), Offering Fraud (16%), and Manipulation (15.5%)” were the most common categories; complaints relating to municipal securities and public pensions were the least common categories. Moreover, the Office of the Whistleblower received 3,620 tips in 2014 (almost 400 more than last year) and returned more than 2,731 phone calls—recall that in May 2011 a whistleblower hotline was established and Whistleblower Office attorneys aimed to return messages within 24 hours.

Two important observations come from our review of the Annual Report. First, growing public awareness of the Whistleblower Program and the increase in the number and amount of whistleblower awards will only lead more individuals to bring alleged violations to the SEC’s attention. Second, given the fact that 80% of whistleblowers had raised their concerns first internally and the fact that nearly one-fifth of all tips, complaints, and referrals relate to accounting issues, it is extremely important for companies to implement adequate policies and procedures to respond to internal reports and to provide training to supervisors on how to handle internal complaints.