SEC’s Whistleblower Chief Manages Growing Pains as Program Gains Popularity

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whistleblower award program, she is facing perhaps her biggest challenge: critics who say the program favors those with connections to the regulator. Established by the 2010 Dodd-Frank Act to encourage the reporting of financial wrongdoing and preventing the types of oversight lapses that led to Bernard Madoff’s multibillion-dollar Ponzi scheme, the SEC’s award program has given out more than $1 billion in total to whistleblowers as the number of tips it receives has steadily risen. But with that success has come greater scrutiny.

The SEC program’s process of determining who receives awards has come under the spotlight in recent years in both circuit courts and law studies. A legal research paper found that almost a quarter of the SEC’s whistleblower awards have gone to law firms with attorneys who have connections to the regulator, potentially deterring other whistleblowers from coming forward. Recent appeals court judgments also have broadly questioned how the agency decides who receives awards.

Kelly faces the challenge of managing the increasing popularity of the whistleblower program with her office’s current staffing resources, industry participants said. At the same time, she is under pressure to address calls for transparency in the program’s processes and the need to protect the identities of whistleblowers. “I’ve been here for 25 years.

I’ve seen many chairs, and as a longtime civil servant…it sounds cliché but we call the balls and strikes," Kelly, who goes by “Cree," said in a recent interview. “At no point have I ever considered who the counsel is on a recommendation. It doesn’t factor into our analysis." Kelly joined the SEC in 1998 as an attorney in its enforcement division.