SEC Recoveries from Whistleblower Tips about Securities Law Violations Top $1 Billion

Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action.  Whistleblower awards can range from 10% to 30% of the money collected when the monetary sanctions ordered exceed $1 million.

The awards come on the heels of the SEC’s annual report to Congress on the whistleblower program that was delivered on November 17, 2017, in which the SEC reported that the whistleblower program, now in its seventh year, is maturing and gaining momentum.

With this latest award, the SEC’s whistleblower program has now paid more than $175 million to 49 whistleblowers under the Dodd-Frank Wall Street Reform and Consumer Protection Act, an increase of almost $70 million since our September 14, 2016 blog post.  These amounts do not include $221 million in whistleblower awards that are awaiting approval.  All payments are made out of an investor protection fund established by Congress that is financed 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.

Congress established the whistleblower program to incentivize whistleblowers with specific, timely and credible information about federal securities law violations to report such improprieties to the SEC.  The more than $1 billion in financial remedies ordered against wrongdoers based on actionable information from whistleblowers includes more than $671 million in disgorgement of ill-gotten gains, much of which has been or is scheduled to be returned to harmed investors.

Since the inception of the whistleblower program, according to the SEC’s Office of the Whistleblower, it has received more than 18,600 whistleblower tips from individuals in all 50 states and the District of Columbia and 95 foreign countries.  Tips from whistleblowers have increased from 3,001 in fiscal year 2012, the first full fiscal year that the Whistleblower Office was in operation, to over 4,400 in 2017, an approximately 50% increase. 

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