Industry Spread

The Industry Spread Editorial Team

SEC praises whistleblowers after $1.3 billion awarded in 10 years

As the U.S. Securities and Exchange Commission celebrated the National Whistleblower Day, Director of Enforcement Gurbir S. Grewal  gave a speech praising the program and the people that come forward and are awarded for their tips and evidence.

The SEC has awarded more than $1.3 billion to 278 individuals ever since its first award in 2012. The program is 10 years-old and has arguably played a critical role in the Division of Enforcement’s ability to effectively detect wrongdoing, protect investors and the marketplace, and bring violators to justice, he said.

“With the help of these whistleblowers, the SEC brought enforcement actions ordering monetary sanctions of approximately $5 billion. Fiscal year 2021, in particular, was a record-breaking year, with the SEC awarding a total of $564 million to 108 whistleblowers.

SEC’s Gurbir S. Grewal recognizes that blowing the whistle may not come without costs, both personal and professional.

“The SEC’s whistleblower rules prohibit any person from taking an action to impede another from contacting the SEC to report a possible securities law violation. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 also expanded protections for whistleblowers and broadened the prohibitions against retaliation by enabling the SEC to take legal action against employers who have retaliated against whistleblowers. Although individuals can choose to report their concerns internally, and many do, they must also report to the SEC to be eligible for Dodd-Frank anti-retaliation protections.[4] The Division remains active in, and committed to, investigating potential violations of the impeding reporting provisions and the anti-retaliation protections.[5] It is essential to the continued vitality of our program that whistleblowers know that we will take seriously any efforts to impede or retaliate against them.

In the name of the SEC Division of Enforcement, Grewal applauded the courage of whistleblowers who step forward and report unlawful conduct and added that whistleblower protections are a cornerstone of the SEC’s program.

Individuals who have credible information about securities law violations are encouraged to submit their whistleblower tips and any additional information electronically through the Commission’s online portal.

The most recent whistleblower award, announced by the SEC on July 19, was worth more than $17 million for detailed information and documents that prompted SEC staff to open a new investigation that led to a successful covered action. Because the information led directly to the success of the action, the whistleblower was entitled to an award based on amounts collected in the related action.

All payments are made out of an investor protection fund established by Congress that is 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 a successful enforcement action.

Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.

As set forth 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.