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A Billion in the Bank and Still No End In Sight For SEC’s Warm Embrace of Whistleblowers

Posted  October 1, 2021

It has been only two weeks since the SEC passed the billion dollar mark in whistleblower awards under the agency’s Whistleblower Program.  By all accounts, there will be no end to the cavalcade of awards that brought us to this landmark event.

Starting with the whistleblower payout that brought the total awards tally past the 10-figure threshold.  It was a blockbuster $110 million award, the second largest to date.  And it went to an apparent company “outsider” who provided an independent analysis of publicly available information.  This was a fact the SEC went out of its way to highlight.  The agency was clearly signaling it wants to hear from anyone with useful information, whether or not they witness the fraud first-hand.

Two days after this whistleblower milestone, the SEC issued $11.5 million in awards to two more whistleblowers, “demonstrat[ing] the Commission’s continued commitment to rewarding individuals who provide high-quality tips.”  And only a week later (last week), the agency made a $36 million award to a whistleblower for “propel[ling] forward an already existing investigation.”

This week the agency took a slightly different turn with its Whistleblower Program.  It took the unusual step of barring two individuals from the program altogether.  The reason was they repeatedly filed what the agency considered “frivolous” and “abusive” award applications “that bore no relation to the underlying enforcement action for which they were applying.”

The SEC’s action here should not be seen as any kind of course correction in its whistleblower embrace.  To the contrary, it is entirely consistent with the agency’s commitment to encouraging and rewarding real whistleblowers with useful information.  The action was taken pursuant to the 2020 amendments to the Whistleblower Program Rules, designed to allow the program “to operate more effectively and efficiently and to focus on good faith whistleblower submissions.”

If there is any takeaway from this latest action, it is that the SEC is serious about its whistleblowers and will not tolerate any activity that in any way interferes with the efficient operation of the Whistleblower Program.  That may come in the form of going after companies that try to block or discourage employees from reporting misconduct to the agency.  Or as with this most recent example, censuring individuals wasting the agency’s time and resources by pretending to take credit for an enforcement success in which they played no role.

What all this means for real whistleblowers going forward is plain and simple.  The SEC wants to hear from you.  The agency has made that clear by word and by deed.  And with roughly half the billion dollars in awards doled out in the last year alone, there will be no dampening in this SEC enforcement approach any time soon.

So if you think you might have useful information on potential securities violations and would like to speak to a member of our experienced whistleblower team, please do not hesitate to contact us.  We look forward to hearing from you.

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Tagged in: Anonymity, Financial and Investment Fraud, Importance of Whistleblowers, SEC Whistleblower Reward Program, Securities Fraud, Whistleblower Rewards,


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