SEC’s Whistleblower Program Hits New High

Employment Law

Coming off a record fiscal year (FY) 2020, the Securities and Exchange Commission’s (SEC) Office of the Whistleblower has already set a new record for FY 2021 with a $114 million award.

The award reflects a combination of a $52 million payment from the SEC and a roughly $62 million award based on “related actions” by another agency. The whistleblower voluntarily provided original information to the SEC and the other agency that launched an investigation that led to a successful enforcement action, the SEC said.

In a redacted order, the SEC concluded that the award amount was appropriate for several reasons: The information provided by the whistleblower was “significant in that it caused Commission staff and Other Agency staff to open investigations and alerted the staff to wrongdoing,” there was a “close nexus” between the whistleblower’s information and the charges brought in the enforcement action, and the whistleblower provided “substantial and ongoing assistance” to the agencies during the investigation.

Further, the whistleblower suffered “serious personal and professional hardships” as a result of the whistleblowing activities and internally reported the concerns, according to the SEC’s order.

The combined payout is now the highest award in the SEC’s whistleblower program history, topping the previous record of $50 million paid out in June 2019.

“Today’s milestone award is a testament to the Commission’s commitment to award whistleblowers who provide the agency with high-quality information,” SEC Chair Jay Clayton said in a statement. “Whistleblowers make important contributions to the enforcement of securities laws and we are committed to getting more money to whistleblowers as quickly and as efficiently as possible.”

The record-setting award puts the SEC on track to top FY 2020’s payout to whistleblowers. On top of the $114 million award, the agency has already paid out more than $42 million in FY 2021 to five whistleblowers.

Since the program began in 2012, the SEC has awarded approximately $720 million to 113 individuals.

To read the SEC’s order, click here.

Why it matters: The $114 million award demonstrates the SEC’s continuing commitment to the whistleblower program, which keeps reaching new heights with each year. Employers should keep in mind that record-setting financial payouts provide a significant incentive to employees to share their knowledge with federal and state agencies.



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