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SEC Whistleblower Program Hands Out Highest Total Awards


The Securities and Exchange Commission (SEC) whistleblower program received more whistleblower tips and handed out more rewards in the fiscal year 2018 than any other year in the program’s history, according to an annual report submitted to Congress this week.

According to the SEC report, the agency awarded more than $168 million to 13 individuals who came forward as whistleblowers in 2018. The record-breaking total amount of whistleblower rewards is more than all prior years of the SEC whistleblower program combined. More than 5,200 whistleblower tips were submitted to the SEC in 2018, also a record-breaking figure for the agency.

Since the program’s inception in 2011, the SEC has ordered wrongdoers in enforcement actions brought by whistleblowers to pay over $1.7 billion in total monetary sanctions, including more than $900 million in disgorgement of ill-gotten gains and interest. Of that total, approximately $452 million has been or is scheduled to be, returned to harmed investors. Whistleblowers have received over $326 million in rewards since the beginning of the whistleblower program.

Included in the 2018 whistleblower awards were three individuals who shared in $83 million and two individuals who shared in nearly $54 million. Before this most recent fiscal year, the highest award was handed out in Sept. 2014, for $30 million. Additional awards given out in the fiscal year 2018 included $16 million to two whistleblowers, $4.1 million to a former company insider, and almost $4 million to an individual who lives overseas.

While some of the people who came forward live in the U.S. and were current or former employees for the organizations they exposed, many were company outsiders and non-U.S. residents. Inside the U.S., the highest number of tips came from California, New York, Florida, Texas, and New Jersey.

Supreme Court Ruling Likely Increased SEC Whistleblower Program Tips

The SEC noted that a Supreme Court ruling in the Digital Realty case may have increased whistleblower tips in 2018. In Digital Realty, the Supreme Court held that a person must report possible securities law violations to the SEC in order to qualify as a whistleblower protected against employment retaliation. The ruling invalidated the SEC’s own rule interpreting that anti-retaliation protections apply regardless of whether a whistleblower reports possible securities law violations to the SEC, another government agency, or internally to an employer. As a result, more people may have brought their allegations directly to the SEC out of concern over a lack of protection if they did not.

Out of all the realtors that have received a reward since the SEC whistleblower program’s inception, approximately 70 percent were current or former employees of the organization they reported. Of those who were insiders, approximately 83 percent brought their concerns to someone else in the organization before reporting to the SEC.

Dodd-Frank Act Intended to Protect Whistleblowers

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act includes whistleblower protections and awards designed to prevent retaliation against whistleblowers and to encourage people with knowledge of fraud or other criminal activity to report it.

Under Dodd-Frank, the SEC rewards whistleblowers for any enforcement actions that result in more than $1 million in monetary sanctions, with awards ranging from 10 to 30 percent of the sanctions collected. Additionally, whistleblowers can bring their claims anonymously through an attorney.

What Makes a Whistleblower Claim Successful?

The SEC’s report highlights characteristics successful whistleblower claims tend to have in common:

  • The information provided by the individual was specific, such as providing names of particular people or transactions involved in the corruption.
  • The illegal activity in question was ongoing when the report is made.
  • The whistleblower continued to provide the SEC with information after submitting the initial tips.

The report also noted that individuals who provided documentation and additional evidence were more likely to have their tips forwarded for follow-up.

Whistleblower Attorneys with Experience

At Baum Hedlund Aristei & Goldman, we are proud to represent whistleblowers who expose fraud and abuse. If you are aware of corporate wrongdoing, we encourage you to speak with one of our whistleblower attorneys today. We know how complicated and daunting the process can be, which is why our expert attorneys are here to guide you through the process and help you bring the strongest case to the SEC or any other government agency.



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