The US Securities and Exchange Commission hit an important milestone today, with two whistleblower awards that pushed the total of SEC whistleblower rewards since 2012 to over $1 billion, affirming the critical role securities whistleblowers play in uncovering financial misconduct.
The $1 billion total was reached as the SEC announced two whistleblower awards in one case: one SEC whistleblower award for $110 million, which is the second largest SEC whistleblower award ever, and a second one for $4 million.
The larger SEC whistleblower award went to an individual who provided the SEC with a significant independent analysis that substantially advanced ongoing investigations by the SEC and another government agency. Out of the $110 million whistleblower award, the SEC awarded the whistleblower $40 million for assistance in an SEC action and approximately $70 million for a related enforcement action by the other agency.
The second whistleblower’s information was helpful, but it was more limited in scope than that provided by the first whistleblower and was provided to the SEC after the SEC’s investigation was already well underway.
The $1 billion total “underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws,” said SEC Chair Gary Gensler in a press release. “The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”
The largest SEC whistleblower award to date was issued last October for $114 million award. At the time, the record-breaking SEC whistleblower award was believed to be the largest-ever whistleblower award issued under any government whistleblower reward program.
The SEC has issued whistleblower awards to 207 individuals since the program’s inception. Enforcement actions from whistleblower tips have resulted in more than $4.8 billion in financial remedies.
Awards and protections drive the SEC whistleblower program’s success
Awards are a key driver of the success of the SEC’s whistleblower program, allowing the agency to rely on well-positioned industry insiders with high quality information about financial misconduct.
The SEC rewards securities whistleblowers with 10% to 30% percent of the amount collected as a result of their information, if SEC sanctions exceed $1 million. There is no maximum limit on the dollar amount.
The law offers SEC whistleblowers strong confidentiality safeguards along with protection from job retaliation and rewards.
The success of the SEC’s whistleblower awards has encouraged similar securities whistleblower programs to adopt rewards. Canada’s Ontario Securities Commission recently celebrated 5 years of action for its whistleblower program, modelled on the SEC’s awards and protections.
The SEC whistleblower program was created by the Dodd-Frank Act in 2010, and the first SEC whistleblower award was issued two years later. The frequency and size of awards issued has increased in recent months, underscoring how seriously the SEC takes the critical contributions of whistleblowers.
The money for SEC whistleblower rewards comes from a special fund supported through monetary sanctions paid to the SEC by securities law violators.
If you are aware of possible securities law violations and are thinking of becoming a whistleblower, contact us for a free, confidential review of your matter by experienced and successful SEC whistleblower attorneys.