SEC Received Record Breaking Number of Tips in FY2022

November 28, 2022

On November 15, the Securities and Exchange Commission (SEC) Whistleblower Office reported that it received a record breaking number of tips in Fiscal Year 2022 (FY2022). The SEC Whistleblower Program incentivizes and encourages individuals to report wrongdoing in the financial sector. In FY2022, the program received 12,300 SEC whistleblower tips, a record-breaking number.

Whistleblowers Received $229 Million in SEC Awards

In FY2022, the program paid out $229 million to whistleblowers across 103 separate awards. According to the report, this is the second-highest program year in terms of dollar amounts awarded.  It also topped the prior year’s record of tips received, coming in at 12,300 tips this year. The program’s largest whistleblower award in FY2022 was $40 million paid to two joint whistleblowers. Since the program’s creation with the Dodd-Frank Act, it has paid out more than $1.3 billion to whistleblowers.

The significant increase in the number of whistleblower tips and awards since the program’s inception shows that the program, with its enhanced confidentiality protections, is effectively incentivizing  whistleblowers to make the often difficult decision to come forward with information about potential securities-law violations.

-Creola Kelly, Chief of the Office of the Whistleblower

Among the awards this year was a $17 million award to a client represented by WLC’s Suzanne Durrell and Bob Thomas. The SEC awarded our client 30% of the monetary sanctions collected, the highest percentage award allowed under the SEC Whistleblower Program.

FY2022 Amendments Led to Increased SEC Whistleblowers Tips

In FY2022,  the SEC Whistleblower Program adopted two Amendments further incentivizing whistleblowers to report potential law violations. The first amendment  expanded the definition of “related action” for purposes of whistleblower awards.  Whistleblowers may now receive awards for certain actions brought by other entities, including designated federal agencies, in situations where those awards might otherwise be paid under the other entity’s whistleblower program.  The second amendment clarifies that the SEC may only consider the dollar amount of a potential award to increase, not decrease, the amount of a whistleblower’s award.

Factors The SEC Considers When Increasing an Award Amount

The Whistleblower program rules contain a presumption of a maximum 30% award when the maximum award would not exceed $5 million. According to the SEC’s report, it awarded the maximum award pursuant to the presumption for 90% of the whistleblower awards made in FY2022.

In considering the award percentage, the SEC considers the following factors in increasing the award:

• The information submitted is significant.  This is the main factor used to determine the award percentage.  It is also vital in apportioning the awards between two or more whistleblowers in the same matter.
• The whistleblowers assisted with the investigation. Once the tip was submitted, the whistleblowers  help moved the investigation along.  As an example, the whistleblower identified potential witnesses and explained complex financial transactions.
• Amount of investor harm caused by scheme. The alleged violations harmed investors, such as, by the theft of investor funds.  In contrast, technical violations that do not cause direct investor harm do not increase an award.
• Internal Reporting. An award may be increased if the whistleblower reported the wrongdoing through internal compliance programs.

Factors That Can Lead to a Decrease in an Award Amount

The SEC considers the following factors in decreasing the award:

• The whistleblowers delayed in reporting the fraud. Timely reporting is essential so the SEC may act quickly to protect investors. In addition, as time passes, evidence may be lost or claims may be time-barred.
• The whistleblower participated in the wrongdoing. A whistleblower who engages in or benefits from the misconduct will receive a lower reward for reporting the misconduct.

We Help Clients File Successful SEC Whistleblower Tips

The Whistleblower Law Collaborative has secured awards for clients in several SEC whistleblower cases. It also represents whistleblowers in ongoing SEC investigations.

If you are considering submitting an SEC Whistleblower tip, complaint, or referral to the SEC, we suggest that you contact us for a free, confidential consultation.  We will discuss the SEC whistleblower process and review your options. Our experienced whistleblower attorneys can explain the filing process and the steps the SEC takes to protect the confidentiality of whistleblowers and their information.