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40 Yale J. on Reg. 688 (2023)
The Whistleblower Industrial Complex

handle is hein.journals/yjor40 and id is 692 raw text is: The Whistleblower Industrial Complex Alexander I. Platt+ Although the whistleblower programs (WBPs) created by Dodd-Frank have received universal acclaim, little is known about how they actually work. In 2021, the Securities and Exchange Commission (SEC) received an average of forty-nine whistleblower tips every workday. Success depends on siting through this avalanche of tips to determine which ones to investigate. To date, however, the tip-siting process has been entirely shrouded in secrecy. This Article breaks new ground. It offers a rare look inside the WBPs administered by both the SEC and the Commodity Futures Trading Commission (CFTC), shining a bright light on the critical role played by private whistleblower attorneys in the tip-sifting process. Using a new dataset comprised of information I obtained under the Freedom of Information Act, I find (among other things) that tipsters represented by lawyers appear to significantly outperform unrepresented ones, repeat-player lawyers appear to outperform first-timers, and lawyers who used to work at the SEC appear to outperform just about everybody. The upshot is that the SEC and CFTC have effectively privatized the tip- sifting function at the core of the WBPs. Private lawyers have earned hundreds of millions of dollars in fees from these programs, with a disproportionate share going to a concentrated group of well-connected, repeat players. Unlike traditional plaintiff-side securities attorneys and attorneys who represent clients seeking government payments in many other contexts, private whistleblower lawyers operate free from virtually all public accountability, transparency, or regulation. I highlight significant efficiency and accountability deficits imposed by this private outsourcing program and propose reforms to realign these private actors with the public interest. t Associate Professor, KU School of Law. For helpful comments, thanks to Lynn Bai, Bernie Black, Jake Bronsther, Albert Choi, Patrick Corrigan, Stephanie Didwania, Chris Drahozal, John Duffy, Jessica Erickson, Michael Gilbert, Virginia Harper Ho, William Hubbard, Andrew Jennings, Hajin Kim, Guha Krishnamurthi, Arthur Laby, Gregory Mark, Francine McKenna, Geeyoung Min, Shalev Roisman, Amanda Rose, Daniel Rosenbaum, David Rubenstein, Peter Salib, Roy Shapira, Gregory Shill, Justin Simard, Noah Smith-Drelich, Emily Strauss, Will Thomas, James Tierney, Verity Winship, several anonymous insider and outsider whistleblowers and whistleblower lawyers, and participants in the Midwestern Law and Economics Association Conference, the Corporate and Securities Litigation Workshop, the Chicagoland Junior Scholars Conference, the University of Michigan School of Law Corporate Governance Seminar, and the Junior Scholars Legal Research Workshop. For exceptional editorial and substantive suggestions, I thank the editors of this journal. Special thanks to Adam Pritchard for encouraging me to pursue this line of research. This research was funded entirely by the University of Kansas School of Law. 688

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