McKessy's departure likely to usher in a new era at the watchdog unit
The first chief of the Securities and Exchange Commission's whistleblower office, Sean McKessy, announced that he is stepping down later this month. Depending on his successor, the office could become more aggressive in spurring whistleblowers to come forward and provide information about securities fraud and other wrongdoing at companies that fall under the regulator's whistleblower program.
McKessy has held the post since the office was established in February 2011 under the Dodd-Frank Act, and helped establish the whistleblower office that assesses and reviews all whistleblower tips received by the agency, evaluates whistleblower award claims, and makes recommendations to the SEC on whether claimants have satisfied eligibility requirements to receive an award.
"The SEC's whistleblower program has had a transformative impact on the agency, and Sean's service as the first head of the Whistleblower Office has contributed greatly to the program's success," said Andrew J. Ceresney, Director of the SEC's Enforcement Division. "Sean has been a staunch advocate for whistleblowers, a relentless promoter of the program, and an invaluable advisor on these issues."
During McKessy's tenure, the whistleblower office has reviewed more than 14,000 whistleblower tips and has awarded more than $85 million to 32 whistleblowers. The SEC was able to bring successful enforcement actions where more than $504 million was ordered in sanctions, including more than $346 million in disgorgement and interest for harmed investors. More than $453 million has been collected in connection with these actions as well as successful related actions.
Still, 32 whistleblowers awarded over more than five years amounts to just about six whistleblowers a year and the number of cases the SEC pursued on information from those tipsters is less than that. It's hard to imagine that a new chair of the office wouldn't push the volume up on the whistleblower caseload. That could be bad news for companies who hope that insiders with information about wrongdoing would bring it to light inside the company before alerting the SEC.
McKessy did, however, pave the way for the program and served it well during its infancy. "It has been an honor and pleasure to serve as the first Chief of the SEC's Office of the Whistleblower," McKessy said in a statement. "Working with the extraordinarily talented and dedicated staff of the Whistleblower Office and the Enforcement Division in standing up a groundbreaking and exemplary Whistleblower Office has been the highlight of my professional career."
The Whistleblower Office's Deputy Chief Jane Norberg will serve as acting chief following McKessy's departure.