The SEC ended a landmark year in whistleblower history by releasing its annual report to the US Congress on the status of the Dodd-Frank Whistleblower Program. While the program has only been around since its inception in 2010, it has already made huge strides, most notably passing the $100 million mark in total payouts to whistleblowers. Below are a few highlights from the SEC’s 2016 report.
The SEC Has Awarded $111 Million in Total
In the brief history of the Whistleblower Program, the program has made $111 million in awards to 34 separate whistleblowers, which works out to an average award of over $3 million per whistleblower. For its part, the SEC has assessed $584 million in fines and an additional $346 million in disgorgement based at least in part on the information provided by the whistleblowers thus far.
More Than Half of All Awards Were Made in 2016 Alone
If the past year is any indication, hitting the $200 million mark may not be all that further off. More than half of total compensation made occurred in the past year alone, with $57 million being awarded in 2016.
Six of the Top Ten Awards Ever Were Made in 2016
The largest whistleblowing award in the program’s history was made in 2014, which was a $30 million award, accounting for over a quarter of the program’s total payouts, but 2016 saw its $57 million collective number spread out among a number of large awards, with six of the program’s top ten awards ever being made in the past year:
- $22 million (August 2016)
- $17 million (June 2016)
- $5 to $6 million (May 2016)
- $4 million (September 2016)
- $3.5 million (May 2016)
- $2 million (March 2016)
Although the Dodd-Frank Act, which established the Whistleblower Program, was a hallmark initiative of the Obama Administration, there is no strong signal yet that the incoming Trump Administration seeks to curtail the popular Whistleblower Program which has brought in so much revenue for the federal government, so it is quite possible the rate of these large awards may continue.
The SEC Is Taking Aim at Companies Who Try to Silence Whistleblowers
Several enforcement actions in 2016 focused on companies who attempted to prevent employees from reporting violations to the SEC. These involved three companies, including Anheuser-Busch, which inserted provisions in employee severance agreements which required employees to waive their rights to severance if they made whistleblower reports. Such types of conditions are illegal under federal law.
“Outsiders” are Being Awarded Similar to Company Insiders
The very term “whistleblower” brings to mind a company insider who has access to insider information, but the SEC does not limit its awards to employees or executives of a wrongdoer company. Awards are available to individuals who work for competitors or may not even work in the industry at all, as was evidenced by a $700,000 award in January 2016 to a “company outsider who conducted a detailed analysis that led to a successful SEC enforcement action.”
There Has Been a 40% Rise in Whistleblowing Tips Since 2012
Because so much money has been paid out to whistleblowers in just the past few years, it is no surprise to learn that that there has been a 40% rise in whistleblowing tips made to the SEC since the early years of the program in 2012. All in all, the SEC received over 4,200 tips in 2016 from over 100 countries around the world.
While that is a large number compared to the number of awards, it is important to understand that the SEC is more likely to follow up and investigate a tip when the information is credible and supported by compelling evidence.
If you have a tip relating to violations of federal securities laws, it is important to work with an experienced whistleblower attorney who can guide you through the process of reporting your information to the SEC in a compelling and persuasive manner. To learn more about how Kreindler & Associates can help in your SEC whistleblower matter, see here.
