The Securities and Exchange Commission (SEC) recently issued its Annual Report to Congress detailing the results of the SEC Whistleblower Program over the past fiscal year.  Under the SEC’s program, individuals who provide information to the agency concerning potential securities violations that leads to a successful enforcement action may receive up to 30% of any government recovery.

Here are the highlights of this year’s whistleblower results:

The SEC made roughly $255 million in awards to 47 whistleblowers, the third highest annual amount for the Program.

The SEC made a $98 million award (August 23) to two whistleblowers, the fifth largest award for the Program.  Rounding out the remaining top 5 awards this past year were two $37 million awards (July 17 and 26); a $28 million award (December 22); and a $24 million award (August 26).

The SEC received roughly 25,000 whistleblower TCR submissions, but roughly 14,000 of them came from two individuals.  The same two whistleblowers accounted for roughly 7,000 of the 18,000 whistleblower submissions made in FY 2023.

The SEC brought 11 enforcement actions for impeding whistleblowers from reporting to the SEC, including through restrictive employment and severance agreements.  This represents the largest number of enforcement actions the SEC has brought in this area, and more than double the number the SEC brought last year.  One of them (against JPMorgan Securities) resulted in an $18 million penalty, the largest to date in this area.

18 of the whistleblowers who received awards were outsiders with no employment connection to the target company.  In this vein, the SEC highlighted how whistleblowers under the Program need not be company insiders but “can also be individuals outside the organization, including, for example, investors or potential investors, competitors, or market observers.”

11 of the SEC awards were based at least in part on the whistleblower’s independent analysis, which the SEC described as involving an “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.”

27 whistleblowers who were awarded this fiscal year caused the Commission to open an investigation or examination that led to an enforcement action, and 20 significantly contributed to an investigation that was already open.

A portion of the awards made to 7 whistleblowers were based on recoveries from enforcement actions other federal agencies brought based on information the whistleblowers provided the SEC.

The SEC reduced 3 whistleblower awards for what the agency considered an unreasonable delay in reporting, stressing “the importance of timely reporting, which allows the Commission to act quickly to protect investors, to gather evidence before it becomes harder to access, and to bring claims for relief before they are time-barred.”

The SEC reduced 3 whistleblower awards due to the whistleblower’s participation in or benefit from the underlying misconduct.

The highest number of foreign whistleblowers came from Canada, the United Kingdom, India, Australia, and Germany.  The highest number of US whistleblowers came from South Carolina, Florida, California, Texas, and New York.

With these whistleblower payouts, the total SEC whistleblower award tally to date now exceeds $2.2 billion to 444 individual whistleblowers since the Program’s inception in 2011.  The SEC Program remains strong with the agency firmly committed to its continued success.  Hopefully, this commitment does not waver with the new Administration and the new Chair soon to be appointed to replace current Chair Gary Gensler, who recently announced his departure from the agency in January.

So if you think you might have information on potential securities violations or would like to learn more about what it means to be a whistleblower under the SEC Program, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon Whistleblower Team for a free and confidential consult.

Read SEC Issues Annual Whistleblower Report Showing Continued Strength of Whistleblower Program at constantinecannon.com