SEC Sanctions and Penalties
The U.S. Securities and Exchange Commission (SEC) obtains billions of dollars each year in monetary sanctions from wrongdoers. As a part of the SEC’s enforcement responsibilities, it issues orders and administers judgements ordering securities violators to, among other things:
- Disgorge, or pay back, ill-gotten gains in order to return the funds to harmed investors;
- Pay civil monetary penalties (see the calculation of civil monetary penalties); and
- Pay interest (prejudgement and potentially postjudgement).
The calculation of monetary sanctions is critically important to SEC whistleblowers. Under the Dodd-Frank Act’s SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to a successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected, which can lead to substantial awards. The largest SEC whistleblower awards to date are $50 million, $39 million and $37 million. For more information about the SEC Whistleblower Program, download the eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.
Year-By-Year Total SEC Sanctions Since FY ’04
Annually, the SEC announces the total monetary sanctions obtained from successful enforcement actions. The table below identifies the total illegal profits that securities violators were required to disgorge and the total penalties they were required to pay.
|2018||$2.506 billion||$1.439 billion|
|2017||$2.957 billion||$832 million|
|2016||$2.809 billion||$1.273 billion|
|2015||$3.019 billion||$1.175 billion|
|2014||$4.16 billion total||$4.16 billion total|
|2013||$2.257 billion||$1.167 billion|
|2012||$2.083 billion||$1.021 billion|
|2011||$1.878 billion||$928 million|
|2010||$1.82 billion||$1.03 billion|
|2009||$2.09 billion||$345 million|
|2008||$774 million||$256 million|
|2007||$1.093 billion||$507 million|
|2006||$2.3 billion||$975 million|
|2005||$1.6 billion||$1.5 billion|
|2004||$1.9 billion||$1.2 billion|
For more information on SEC sanctions, see a recent speech by the SEC’s Division of Enforcement: Remedies and Relief in SEC Enforcement Actions.
SEC Whistleblower Program
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information about a violation of the federal securities laws that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the information, the SEC will issue an award of between 10 to 30 percent of the total monetary sanctions collected to the whistleblower. If represented by counsel, a whistleblower may submit a tip anonymously to the SEC.
In its short history, the SEC Whistleblower Program has had a tremendous impact on securities enforcement. Since the inception of the program in 2011, the SEC has received more than 28,000 whistleblower tips, some of which have enabled the SEC to recover more than $1.7 billion in monetary sanctions from wrongdoers. To date, the SEC’s Office of the Whistleblower has paid more than $384 million in awards to whistleblowers.
Violations Leading to SEC Sanctions
A tip about any violation of U.S. federal securities laws may qualify a whistleblower for an award under the SEC Whistleblower Program, including:
- Accounting fraud;
- Investment and securities fraud;
- Insider trading;
- Foreign bribery and other FCPA violations;
- EB-5 investment fraud;
- Manipulation of a security’s price or volume;
- Fraudulent securities offerings and Ponzi schemes;
- Hedge fund fraud;
- Unregistered securities offerings;
- Investment adviser fraud;
- Broker-dealer anti-money laundering program violations;
- False or misleading statements about a company or investment;
- Inadequate internal controls;
- Deceptive non-GAAP financial measures;
- Improper revenue recognition;
- Violations of auditor independence rules; and
- Blockchain fraud.
Tier-1 Law Firm Representing SEC Whistleblowers
If you would like more information on the SEC Whistleblower Program, contact an SEC Whistleblower Attorney at Zuckerman Law for a free, confidential consultation. Zuckerman Law is one of the nation’s leading law firms representing whistleblowers in whistleblower rewards and retaliation cases.
SEC Whistleblower Lawyers
How to Qualify for a SEC Whistleblower Bounty
- See our column in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.
- See our column in Going Concern: Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever.
- See our post in Accounting Today: Whistleblower Protections and Incentives for Auditors and Accountants.
- See our post in The Compliance and Ethics Blog: Shkreli Trial Reveals the Challenges Faced by Compliance Whistleblowers.
Are Whistleblowers Protected from Retaliation?
Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.