SEC Issues Largest-Ever Whistleblower Award of $279M

The United States Securities and Exchange Commission (SEC) has issued its largest-ever whistleblower award totaling $279 million.

The SEC typically awards 10% to 30% of collected monetary sanctions larger than $1 million. To be eligible for such an award, the whistleblower must give information that directly aids the SEC in successfully enforcing enforcement measures in a specific instance.

The SEC stated in a May 5 statement that the $279 million granted to those anonymous was more than double the previous high of $114 million set in October 2020. Furthermore, the $279 million award in this recent instance exceeds the whole amount of whistleblower rewards made in 2022, with the SEC awarding $229 million across 103 awards last year.

“The size of today’s award — the highest in our program’s history — not only incentivizes those reporting to come forward with accurate information about potential securities law violations, but also reflects the tremendous success of our whistleblower program,” said Gurbir Grewal, director of the SEC’s division of enforcement.

These rewards are made possible by an investor protection fund created by the United States Congress. It is supported by monetary punishments paid to the SEC by securities law offenders, rather than cash owing to aggrieved investors. To safeguard the whistleblower’s anonymity, the SEC does not refer to the specific case or identity of the whistleblower in these cases. As a result, it’s unclear if this is related to a large securities breach in the crypto industry or on Wall Street.

Concerning the whistleblower, the SEC stated that they assisted in providing critical information on a case that was already under investigation. Creola Kelly, the chief of the SEC’s whistleblower office, stated that the consistent support of those reporting, including multiple interviews and written submissions, was critical to the success of the operation.

Whistleblower Office Established After Dodd-Frank

As part of the Dodd-Frank reforms, the SEC’s Office of the Whistleblower was established in 2011. The Dodd-Frank Act was enacted in reaction to the 2008 financial crisis, with the goal of repairing the financial industry by boosting transparency, accountability, and investor protection.

Many nations offer hotlines where anonymous tips about financial crimes can be given. Even if they don’t have dedicated offices for them. The Financial Conduct Authority in the United Kingdom offers an anonymous hotline. Similar schemes exist in France, Germany, and the other G7 countries. However, Canada only takes written complaints, either by email or normal mail.