The Securities and Exchange Commission's (SEC) whistleblower program hit a big milestone, topping $1 billion in awards in less than a decade (it began in 2012).
A pair of whistleblowers received awards to reach that mark: one individual who received $4 million and a second who received $110 million, approximately $40 million from the SEC and $70 million arising out of related actions by another agency.
The $110 million recipient provided “significant independent analysis” that substantially advanced investigations by the SEC and the other agency, while the $4 million award recipient's informationwhile original and leading to a successful enforcement actionwas provided after SEC staff had already opened an investigation and undertaken “significant” investigative steps, the agency said.
Of the $1 billion total, more than $500 million was paid out in fiscal year 2021 alone, including the largest whistleblower award paid out: a $114 million award for an individual whistleblower, consisting of a $52 million payment from the SEC and another $62 million based on related actions by another agency.
Not long after, the SEC announced a new $36 million award, moving the total payout up to roughly $1.1 billion paid to 214 individuals.
In related news, the SEC also announced that it barred two individuals from the whistleblower program, each having filed “hundreds of frivolous award applications,” the agency said.
Over multiple years, the individuals submitted award applications to the SEC “that bore no relation to the underlying enforcement action for which they were applying,” filings that consumed staff time and resources, hindered the efficient operation of the program, and did not contribute to any successful enforcement action.
After the individuals were repeatedly warned to stop submitting the abusive filingsand they failed to do sothe ban was issued pursuant to 2020 amendments made to the Whistleblower Program Rules.
The bars apply to any pending award application from the individuals as well as any future award applications.
“Frivolous award applications hamper our ability to efficiently process awards to meritorious whistleblowers who come forward with helpful information intended to assist law enforcement,” Emily Pasquinelli, acting chief of the SEC's Office of the Whistleblower, said in a statement. “[T]he permanent bars send an important message that frivolous award filers will not be tolerated.”
Why it matters: While hitting the $1 billion mark is significant in and of itself, the fact that half of the total was awarded in the past fiscal year sends a strong message about the SEC's current efforts to encourage whistleblowers and whistleblowing activity.
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