The SEC has had its third busiest year of whistleblowing actions since it started paying out awards in 2012. In 2022, the regulator awarded 24 individuals and five groups of whistleblowers a total of over $214.25m for their information and assistance. A total of 25 actions were carried out as a result. With the help of the whistleblowers, the SEC has been able to prevent fraud, tackle misconduct occurring overseas, and return money to harmed investors.

The biggest award was paid out in January, where $40m was awarded to four people for their information and assistance in three separate actions.

The biggest award to a single person was made in December, when one whistleblower was awarded $37m for information that led to a successful SEC enforcement action and a related action.

Creola Kelly, Chief of the SEC’s Office of the Whistleblower, said then: “The whistleblower here made persistent efforts to bring the conduct to the attention of the SEC, another agency, and the company and is credited with the results of the company’s internal investigation.”

$114m record

The figures show 2021 was the busiest year – with over 50 actions taken out as more than $453m was awarded to whistleblowers. Second busiest was 2020, with over 40 actions and awards exceeding $348m.

The highest award ever handed out was in October 2020, when a whistleblower was awarded over $114m for information and assistance that led to the successful enforcement of SEC and related actions. 

Jane Norberg, Chief of the SEC’s Office of the Whistleblower called this whistleblower’s actions extraordinary and said: “After repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC and the other agency of the wrongdoing and provided substantial, ongoing assistance that proved critical to the success of the actions.”

Approximately $52m was recovered in connection with the SEC case and about $62m in relation to related actions by another agency. 

Updated rules

In August, the SEC also adopted two amendments to the governing whistleblower rules to enhance the program.

Now, the Commission can pay whistleblowers for their information and assistance in connection with non-SEC actions with other entities and federal agencies. The Commission also has the right to increase an award from the normal rate, but not to lower it.

“The first amendment expands the circumstances in which a whistleblower who assisted in a related action can receive an award from the Commission for that related action rather than from the other agency’s whistleblower program. Under the second amendment, when the Commission considers the size of the would-be award as grounds to change the award amount, it can do so only to increase the award, and not to decrease it. I think that these rules will strengthen our whistleblower program. That helps protect investors,” said SEC Chair Gary Gensler.

The awards can range from 10 to 30% of the money collected when the monetary sanctions exceed $1m. The money is taken out of an investor protection fund established by Congress, which is financed entirely through monetary sanctions paid to the SEC by securities law violators.

No money has ever been taken or withheld from harmed investors to pay a whistleblower award.

Since the first whistleblowing award in 2012, the SEC has awarded over $1.388bn to 285 individuals.