Image of Whistleblowers Supercharge Anti-Fraud Enforcement in 2017

Whistleblowers Supercharge Anti-Fraud Enforcement in 2017

 

In 2017, whistleblower reward laws continued to supercharge anti-fraud enforcement and protect taxpayers and investors.

Whistleblower False Claims Act Lawsuits Yield $3.4 Billion in Recoveries in FY 2017

Health care fraud costs taxpayers at least $60 billion annually.  The most effective tool to combat fraud on the government is the whistleblower or qui tam provision of the False Claims Act (FCA).  Under the FCA, a successful qui tam relator can recover 15 percent to 30 percent of the government’s total recovery in a suit for the knowing presentment of a false or fraudulent claim for payment or approval by the government or other violations of the FCA.  Since the enactment of the law, qui tam actions brought by whistleblowers have enabled the federal government to recover approximately $40 billion.

On December 21, 2017, the Department of Justice announced that it recovered more than $3.7 billion in settlements and judgments from civil cases involving fraud in the fiscal year ending September 30, 2017, and $3.4 billion of those recoveries stemmed from whistleblower claims filed under the qui tam provisions of the FCA.  In FY 2017, the government paid $392 million qui tam whistleblowers.

To learn more about the False Claims Act’s qui tam provisions, see below:

SEC Whistleblowers Enable the SEC to Recover $1 Billion in Penalties and Disgorgement

Since its inception in 2011, the SEC Whistleblower Program has proven to be an unmitigated success.  In its short history, the program has enabled the SEC to recover more than $1 billion in penalties and disgorgement from wrongdoers has issued more than $175 million in awards to whistleblowers.  Based on the improved statistics each year, it is safe to say that the SEC Whistleblower Program is just getting started.

According to the SEC Whistleblower Office’s 2017 Annual Report to Congress, the office received more than 4,400 tips in FY 2017.  This is the most tips the office has received in one year.  The majority of tips related to corporate disclosures and financials, offering fraud and market manipulation.  Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery, and unregistered securities offerings.

The states that yielded the highest number of tips in FY 2017 were California, New York, Texas, Florida, New Jersey and Illinois. States reporting more than sixty tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, Pennsylvania, Virginia and Washington.  The SEC Whistleblower Office also received tips from 72 foreign countries in FY 2017.  The highest number of tips were from whistleblowers in Canada, the United Kingdom and Australia.  Notably, whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.

The SEC Whistleblower Office has issued a majority of the whistleblower awards in the past two fiscal years.  In FY 2016, the office issued more than $57 million in awards to whistleblowers, including six of the ten largest whistleblower awards in the program’s history.  In FY 2017, the SEC issued nearly $50 million in awards to whistleblowers, including a $7 million award to three whistleblowers exposing an investment scheme, a $5.5 million award to a company insider who exposed ongoing fraud targeting a vulnerable investment community, and a $4 million award to a whistleblower who provided original information that was the primary cause for the SEC opening an investigation.

In FY 2018, the SEC Whistleblower Office is primed to issue some of the largest awards to date.  According to the SEC’s 2017 Financial Report, the SEC recognized a contingent liability of $221 million as of September 30, 2017 for estimated whistleblower awards where the payment is considered probable.  This likely includes a $61 million award to two J.P. Morgan whistleblowers and a $22.6 million award to another whistleblower.

To learn more about the SEC Whistleblower Program, see our FAQ:

  1. What is the SEC Whistleblower Program?
  2. What violations qualify for an SEC whistleblower award?
  3. How can I submit a tip to the SEC?
  4. Can I submit an anonymous tip to the SEC Whistleblower Office?
  5. When is the best time to report the fraud or misconduct to the SEC?
  6. Can I submit an SEC Whistleblower claim if the SEC already has an open investigation into the matter?
  7. Who is an “eligible” SEC whistleblower?
  8. Can compliance personnel, auditors, officers or directors qualify for an SEC whistleblower award?
  9. What is “original information”?
  10. How might my information “lead to” a successful SEC enforcement action?
  11. Can I submit a claim if I had involvement in the fraud or misconduct?
  12. Do I have to report a securities law violation to my company before reporting the violation to the SEC?
  13. Can I submit a tip if I agreed to a confidentiality provision in an employment/severance agreement?
  14. What factors does the SEC consider when determining the amount of the award?
  15. What employment protections are available for SEC whistleblowers?
  16. What type of evidence should I provide to the SEC?
  17. Can I disclose secret recordings to the SEC?
  18. What happens after I submit a tip to the SEC?
  19. How long does it take to receive an SEC whistleblower award?
  20. What happens after I apply for an SEC whistleblower award?
  21. What are the largest SEC whistleblower awards?

How to Qualify for a SEC Whistleblower Award

Whistleblower Rewards

Avatar of Jason Zuckerman

Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.

Avatar of Matthew Stock

Matthew Stock is an associate at Zuckerman Law, where his practice focuses on representing whistleblowers in whistleblower rewards and whistleblower retaliation cases. He is also a Certified Public Accountant, Certified Fraud Examiner, and former KPMG external auditor.