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Annual Report Reveals SEC Whistleblower Program’s Bright Future: Hundreds of Millions in Whistleblower Awards Coming Soon

The 2017 Annual Report of the SEC Office of the Whistleblower reveals that the program is extraordinarily successful in enabling the SEC to protect investors and halt ongoing fraud. In particular, whistleblower tips have enabled the SEC to recover nearly $1 billion in monetary sanctions from wrongdoers, including more than $671 million in disgorgement of ill-gotten gains. The report also indicates that the program is growing. In fiscal year 2017, the SEC received over 4,400 tips, an increase of nearly 50 percent since fiscal year 2012.

While the awards in fiscal year 2017 of nearly $50 million reflect a slight decrease compared to fiscal year 2016 (issuing over $57 million in awards), the SEC Whistleblower Program appears primed to issue some of the largest awards to date in fiscal year 2018 and 2019. According to the SEC’s 2017 Financial Report, the “SEC recognized a contingent liability for the year ended September 30, 2017 of $221 million, which represents a recognized liability for estimated whistleblower awards where the payment is considered probable.” This likely includes a $61 million award to two J.P. Morgan whistleblowers.

Highlights of SEC Whistleblower Office 2017 Annual Report

The annual report details the SEC Whistleblower Program’s remarkable successes this fiscal year. Highlights include:

  • In fiscal 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 impetus for the SEC opening an investigation. Since the inception of the program in August 2011, the SEC has issued more than $162 million to whistleblowers. The largest award is more than $30 million.
  • In fiscal 2017, approximately 56% of award recipients were represented by counsel, 19% of which filed anonymously. Note: The SEC Whistleblower Program only allows anonymous submissions when represented by counsel.
  • The SEC received 4,484 tips in fiscal 2017, which is the greatest number of tips the SEC Whistleblower Office has received in its history. Since 2011, the office has received nearly 23,000 tips.
  • Consistent with previous years, the most common tips related to Corporate Disclosures and Financials (19%), Offering Fraud (18%), and Manipulation (12%). Other notable areas of tips related to Insider Trading, Foreign Bribery and other FCPA violations, and Unregistered Offerings.
  • Individuals in California, New York, Texas, Florida, and New Jersey submitted the largest number of tips in fiscal 2017. This is relatively consistent with fiscal 2016, when the SEC received the highest number of tips from California, New York, Texas, Florida, and Ohio.
  • In fiscal 2017, the SEC received 12% of its tips from individuals in foreign countries, which represents a slight increase from 10% in fiscal 2016. This underscores the increasing reach of the program. Individuals from the United Kingdom, Canada, and Australia submitted the highest number of whistleblower tips from foreign countries in both fiscal 2016 and 2017.
  • The SEC brought two actions against companies for imposing restrictions in separation and severance agreements that could deter whistleblowers from providing information to the SEC. In particular, the SEC brought an action against BlackRock, Inc. for including language in separation agreements that required employees to waive any right to an award under the SEC Whistleblower Program.
  • The SEC brought one anti-retaliation enforcement action in fiscal 2017. To date, the SEC has brought three anti-retaliation enforcement actions.

Qualifying for a SEC Whistleblower Award

Resources for SEC Whistleblowers

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.

Matthew Stock is the Director of the Whistleblower Rewards Practice at Zuckerman Law. He represents whistleblowers around the world in SEC, CFTC and IRS whistleblower claims. He is also a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.