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SEC’s Office of the Whistleblower Has Record-Setting Year

The U.S. Securities and Exchange Commission’s (SEC) Office of the Whistleblower recently released its Annual Report to Congress for the 2023 fiscal year. The report reveals that the SEC’s Whistleblower Program established new records for the fiscal year 2023, receiving more than 18,000 whistleblower tips and awards totaling nearly $600 million—the highest annual total by dollar value in the program’s history. The SEC’s 18,000 whistleblower tips are almost 50% more than the previous records set in fiscal year 2022 with 12,322 tips received from whistleblowers and 12,210 tips received in fiscal year 2021.

The 2023 whistleblower tips alleged a variety of types of misconduct, with the most common involving manipulation (24%), offering fraud (19%), initial coin offerings and crypto asset securities (14%), and corporate disclosures and financials (10%).

Included in the 2023 award total is a record-setting single award of almost $279 million—the largest in the history of the SEC’s Whistleblower Program. The agency also awarded a $104 million total award to seven whistleblowers, including foreign nationals, for reporting misconduct at an entity’s subsidiaries in three jurisdictions.  That award is the SEC’s fourth largest award in the history of the agency’s Whistleblower Program.

In fiscal year 2023, the SEC granted awards in 40 Covered Actions. Two of these actions were brought by Phillips & Cohen’s whistleblower clients—one involved an award of more than $9 million and one of $1.9 million.

The SEC has awarded more than $1.9 billion to 397 individual whistleblowers since the beginning of the program in 2011, according to the agency.

The SEC also continued to show that it takes whistleblower protections very seriously by cracking down on companies impeding whistleblower reporting and anti-retaliation protections. In one instance, the SEC assessed a $10 million civil penalty against D.E. Shaw & Co. for requiring new employees to sign agreements that prohibited them from disclosing “confidential information” outside the company unless authorized by the company or required by law or an order of a court or other government body.

The agency also found Activision Blizzard, Inc., a video game development company, violated the whistleblower protection rules by using separation agreements that required former employees to notify the company of any request for information from the SEC. To date, the SEC has brought 21 enforcement actions involving Rule 21F-17 whistleblower protections and five anti-retaliation enforcement actions.

Finally, the Investor Protection Fund that provides for the awards for the SEC’s Whistleblower Program, reported a balance of $337,707,791.64 at the end of fiscal year 2023. The fund is financed entirely through monetary sanctions paid to the SEC for securities law violations.

If you have information about securities fraud and are considering blowing the whistle, get in touch for a free, confidential consultation.

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