On September 15, 2021, the Securities and Exchange Commission announced that it has now paid more than $1 billion to over two hundred whistleblowers over the course of the program’s 10-year history, including awards of more than $500 million in FY 2021 alone. On the same day, the agency issued awards of approximately $110 million and $4 million to two whistleblowers whose information and assistance led to successful enforcement actions. In marking the occasion, SEC Chair Gary Gensler said “The assistance that whistleblowers provide is crucial.”
Update: On September 17, the SEC announced awards totaling $11.5 million to two whistleblowers whose information helped lead to a successful enforcement action. The first whistleblower, who received $7 million, was “the initial source that caused the staff to open the investigation into hard-to-detect violations and thereafter provided substantial assistance,” the SEC said. By comparison, the second whistleblower, who received $4.5 million, submitted information “after the investigation was already underway, and had delayed reporting to the Commission for several years after becoming aware of the wrongdoing.” This underscores the crucial importance of being the first to provide information about a particular fraud.
Securities fraud is particularly attractive to financial predators, especially since the SEC is (and has traditionally been) under-resourced. In a recent televised interview, Gensler said the SEC is facing a range of challenging enforcement issues even as it has up to 5% fewer staff members than five years ago. Gensler recently told Senators that the agency needs “a lot more people.”
In such a climate, it’s even more important that whistleblowers step up to make the agency aware of fraud it might otherwise miss. In marking the $1 billion milestone, Gensler said “When I see the commission’s enforcement actions each week, I am reminded of how the whistleblower program helps us be better cops on the beat, execute our mission, and protect investors from misconduct.”
SEC whistleblowers who voluntarily provide original, timely, and credible information that leads to a successful enforcement action may be eligible for awards ranging from 10-30% of the money collected when the monetary sanctions exceed $1 million. The SEC protects the confidentiality of whistleblowers and does not disclose a whistleblower’s identity.
Securities fraud can include any deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions based on false information. It can also include outright theft from investors (embezzlement by brokers), stock manipulation, misstatements on a public company’s financial reports, insider trading, “front running,” and lying to corporate auditors. If you’re aware of – or have been a victim of – any of these or similar fraudulent practices, speak with the experienced SEC whistleblower attorneys at Brown, LLC today. Did you know that under the SEC rules, with the use of a SEC whistleblower law firm there’s a good chance that the insider can stay anonymous from start to finish. Our firm’s founder, Jason T. Brown, a former FBI Agent, leads the SEC litigation team who will work hard to take the appropriate steps to ensure that SEC whistleblower complaints are filed properly and taken action to help whistleblowers receive awards.