Whistleblowing is becoming a big business! The U.S. Securities and Exchange Commission (SEC) announced awards of approximately $110 million and $4 million to two whistleblowers whose information and assistance led to successful SEC and related actions. Including these awards, the SEC’s whistleblower program has paid more than $1 billion in awards to 207 whistleblowers, including over $500 million in the fiscal year 2021 alone. The $110 million award stands as the second-highest award in the program’s history.
The first whistleblower’s $110 million award consists of an approximately $40 million award in connection with an SEC case and an approximately $70 million award arising out of related actions by another agency. He provided significant independent analysis that substantially advanced the SEC‘s and other agencies’ investigations.
The second whistleblower voluntarily provided original information that led to the successful enforcement action. Still, this information was provided to the SEC after the staff had opened an investigation and undertaken significant investigative steps and was much more limited compared to the information and assistance provided by the first whistleblower.
Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws. The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”SEC Chair Gery Gensler
The SEC has awarded approximately $1 billion to 207 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to successful enforcement action. Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.
As outlined in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity.