31 SEC Whistleblower Award Denials in a Row: What It Means for the SEC Program’s Future

Brown, LLC has the privilege of representing an SEC whistleblower whose courageous actions led to a monumental $100 million SEC enforcement action against one of the biggest names in the accounting world, Ernst & Young. This case, one of the largest penalties ever imposed on an accounting firm, followed years of unethical practices, including auditors cheating on professional exams and violating industry standards.

But there’s a twist to this story that might surprise you. Stay tuned to the end to find out who the whistleblower is, and whether they received the reward they were hoping for.

The SEC’s whistleblower program has been instrumental in bringing justice to financial markets. It rewards individuals who expose securities violations that lead to significant enforcement actions. However, the program has become more challenging for whistleblowers to navigate, especially as the SEC has become more stringent about the information required for a successful claim.

Each year, the SEC receives thousands of whistleblower tips, over 18,000 in fiscal year 2023 alone. But only a small fraction of those lead to enforcement actions, and an even smaller number result in awards. To be eligible, the tip must be voluntarily submitted, contain original information that leads to a successful enforcement action, and meet strict procedural requirements, sometimes like filing a Form TCR, (Tips, Complaint Report) sometimes within a tight window. Even then, the SEC may settle the matter because of your information and NOT TELL YOU. That’s right – they may hide the ball from the helper – not very nice especially if you’re trying to encourage other whistleblowers to come forward.

Then after finding out about the Notice of the Covered Action, aka NOCA, the whistleblower has to file a timely claim for an award after the action is public and listed on the SEC’s site. Missing that step alone has led to countless denials. The volume of incoming claims and the complexity of the criteria mean that good information isn’t always enough, you have to present it the right way, at the right time, and through the right channels. Which underscores why, now, more than ever its critical to have quality SEC whistleblower law firm in your corner BEFORE you file or else your information may go right to the circulate file.

Let’s look at some the staggering numbers to put this in perspective.

For example, 2023 was a record-breaking year for the SEC whistleblower program. The agency paid out nearly $600 million in awards to just 68 individuals, including an unprecedented $279 million award to a single whistleblower. So there’s big bucks for the right intel filed the right way. But those SEC whistleblower rewards are hard to come by as just 68 awards came from a pool of over 18,000 tips submitted that year. That means less than 0.4% of submissions, fewer than 4 out of every 1,000, actually led to a payout.

Or put another way, roughly 1 in every 265 tips resulted in an award.

But this year there’s been 31 denials in a row by the SEC. 31 enforcement actions and in each time the SEC refused to credit a whistleblower. Imagine flipping a coin 31 times in a row. What are the odds it will land heads every single time? The probability of that happening is about 1 in 2.1 billion.

Think about how rare that is. The odds of being struck by lightning in a given year are about 1 in 1.2 million. The odds of being attacked by a shark? One in 11.5 million. Making a hole-in-one in golf? That’s about 1 in 12,500. And just for fun, the odds of finding your soulmate? Some say around 1 in 30,000. Its too early to tell how much your soulmate odds will increase at a Cold Play concert. But statistics can be misleading.

The point is, even though there have been 31 whistleblower denials in a row, and even if you assume a fair 50/50 chance of approval, the odds of 31 straight denials still work out to something like one in two billion. Maybe some of those applicants deserved to be denied. But all of them? And if you’re reading this thinking, Could that happen to me? You’re asking the right question.

So what does that mean for you if you’re thinking about filing an SEC whistleblower claim?

It means the margin for error is razor thin. Because like that coin flip, the odds of satisfying the SEC’s evolving and increasingly strict requirements for an award are becoming harder to meet. Even when the whistleblower’s information was critical to the action, the SEC’s new interpretations of the rules often mean the whistleblower doesn’t meet the technical threshold for a reward.

But here’s the twist: don’t give up. And here’s the deeper takeaway: in this environment, it’s more important than ever to work with a law firm that knows how to structure an SEC submission the right way from the start. Not every tip is treated equally. If it’s poorly drafted, lacks legal framing, or misses key markers the SEC expects—it may never be fully considered. It may not even make it past the initial screen. It could just get filed away in the government’s circular file also known as the trash, never to be heard from again.

This isn’t like sending an email and hoping someone reads it. This is a complex legal process with real money and real stakes. And if your submission doesn’t check the right boxes right away, it could be routed right down the memory hole, permanently.

That’s why experience matters. At Brown, LLC, we’ve been on the front lines of some of the largest whistleblower recoveries in the world. We know how the system works. We know what the SEC looks for. And we know how to protect your identity while maximizing the chances your information leads to action and an award.

This case isn’t just about one whistleblower. It reflects the broader challenges that whistleblowers across the country are now facing. While the SEC whistleblower program has been a vital tool for uncovering fraud, the increased complexity and stricter standards have made it feel like trying to win a coin toss 31 times in a row.

But at Brown, LLC, we’ll continue to fight for those who risk everything to expose the truth. We believe that no matter how rare the odds, justice is worth pursuing.

I started by telling you about our $100 million dollar SEC whistleblower case – who is our whistleblower – I’ll let you in on a little secret – THEY’RE ANONYMOUS!!! Just like you can be if you file your SEC matter the right way. They’re still anonymous even though we’re battling it out in the Circuit Court whether they are entitled an award when the SEC itself ostensibly concedes the covered action was based on their tip. So what’s the problem – why aren’t they paying? They still might, and the results are a story for another day.

So if you’re thinking about blowing the whistle—don’t do it alone. You need someone in your corner who knows the fight, who’s taken on giants before, and who knows how to win. At Brown, LLC, we stand with whistleblowers. Call us confidentially at 877-561-0000. It costs you nothing to ask—but it might cost you everything if you don’t.