September 29, 2021
The U.S. Securities and Exchange Commission (SEC) has now paid more than $1 billion to whistleblowers since its bounty program began in 2012. The SEC Whistleblower program awards whistleblowers for information about violations of securities laws.
Two recent awards of $110 million and $4 million brought the program to the $1 billion milestone. The $110 million award is the second-largest award issued by the SEC. The largest award of $114 million came in October 2020. Indeed, the whistleblower program has moved at full tilt since hitting the $500 million milestone 14 months ago. It has awarded $500 million to whistleblowers in 2021 alone.
First, the $110 million award to one whistleblower is made up of a $40 million award from an SEC case and a $70 million award from related actions by another agency. The whistleblower provided independent analysis that substantially advanced the SEC’s and other agency’s investigation.
Second, the SEC awarded a whistleblower $4 million. That individual provided original information that led to a successful SEC enforcement action. But the SEC had already taken significant investigative steps before the whistleblower provided the information. The information was more limited as compared to the information and assistance the first whistleblower provided.
Under the SEC Whistleblower Program, whistleblowers can submit an anonymous tip about violations of federal securities laws. The program awards a whistleblower if the information leads to a successful enforcement action. Whistleblower awards range from 10% to 30% of the money collected from the wrongdoer if those sanctions exceed $1 million.
Whistleblowers play a pivotal role in exposing wrongdoing and protecting investors. As SEC Chair Gary Gensler explained:
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.
You can watch Chairman Gensler himself announce this milestone and praise the whistleblowers who have come forward to date.
Without a whistleblower, the SEC would not have known about a foreign currency trading fraud carried out by Bank of New York Mellon (BNYM). BNYM promised customers the best rates on major currency trades made through the bank. Instead, customers received the worst rates of the trading day. The bank pocketed the difference. In that case, the whistleblower received a $50 million reward for this “highly significant” information.
The SEC faces a range of new and challenging enforcement issues. We have warned that bad actors will try to capitalize on the economic uncertainty and market volatility surrounding the pandemic. The SEC has aggressively pursued COVID-19 investment scams. Last year, the SEC suspended stock trading of companies that made inaccurate or false statements about the effectiveness of their products against COVID-19.
If you are considering submitting a 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 all of your options. We can explain the filing process and the additional steps the SEC will take to protect the confidentiality of whistleblowers and their information.