Yesterday, the SEC awarded nearly $2 million to three whistleblowers. Approximately $1.8 million, the largest of the awards, was granted to a whistleblower who voluntarily provided original information that allowed the SEC to open an investigation and continued to provide information during the investigation. Two other whistleblowers, who provided information after the investigation started, each received awards of approximately $65,000.
The substantial discrepancy between the large and smaller awards makes clear the impact of early reporting. However, the smaller awards also illuminate the value of reporting even at a later time as subsequent whistleblowers can provide actionable intelligence to support the agency’s investigative efforts.
Sean McKessy, Chief of the SEC’s Office of the Whistleblower, commented, “We’re seeing a significant uptick in whistleblower tips over prior years, and we believe that’s attributable to increased public awareness of our program and the tens of millions of dollars we’ve paid to whistleblowers for information that helped us bring successful enforcement actions.”
Given this increase in the number of tips, and given that the life of most investigations averages two to four years, it is not surprising that we are witnessing a surge of whistleblower awards. As we reported yesterday, the SEC is proving a formidable and expert foe against misconduct. As Chair White recently stated in a speech about the SEC Whistleblower Program, “Gone are the days when corporate wrongdoing can be pushed into the dark corners of an organization. Fraudsters rarely act alone, unobserved and, these days, the employee who sees or is asked to make the questionable accounting entry or to distribute the false offering materials may refuse to do it or just decide that they are better off telling the SEC.”
As it continues to protect and empower whistleblowers, and reckons harshly with wrongdoers, the SEC is making enormous strides to eradicate the pervasive fraud that has plagued the financial services industry for far too long.