Stream of SEC Whistleblower Awards Continues with Five New Awards -- But Payouts Remain Small
By the 91pornWhistleblower Team
It was just a month ago when we reported — after a wave of SEC whistleblower awards — that the SEC Whistleblower Program was alive and well. Up until then, the SEC had been relatively sparse with its awards this year under the SEC Whistleblower Program and many had questioned whether the SEC’s support for the program was losing steam. But with the SEC issuing five awards within a week, the agency sent a strong signal that it remains committed to the whistleblower program.
New SEC Whistleblower Awards Continue to Be Small
That signal got even stronger with the SEC issuing another five whistleblower awards last week — one on September 29 and four on September 30. But, unlike in prior years, the SEC whistleblower awards this year continue to be relatively small. In fact, two of the most recent awards were for no money at all.
Following its standard practice of protecting the confidentiality of its whistleblowers, the agency provided almost no detail on the awards or the enforcement actions with which they were associated. All we know from the heavily redacted Award Orders is the following:
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- The September 29 award comprised payments of $180,000 and $130,000, respectively, to two whistleblowers. Notably, the agency found the two whistleblowers contributed equally to the success of the enforcement action but one received a lower award because of what the SEC considered the unreasonable delay in reporting the misconduct (roughly 15 months).1
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- The first September 30 award was for roughly $3.4 million. However, the whistleblower objected to the award as “exponentially smaller” than what it should have been because the whistleblower first reported internally, which prompted the company to disgorge substantial sums. The SEC refused to credit these payouts towards the whistleblower’s award because they were made before the agency brought its enforcement action. Its reasoning was firm: “The statutory definition of ‘monetary sanctions’ is clear and unambiguous and does not permit voluntary reimbursements made by a respondent before an enforcement action is brought to qualify as monetary sanctions upon which a whistleblower award can be made.”2
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- The second September 30 award was for roughly $700,000 to a whistleblower who made multiple submissions to the agency that “provided a roadmap for the investigation.”3
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- The third September 30 award provided for no current payment because the SEC had not collected any funds from the defendant. There was no indication of whether any future collection or payment would be made.4
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- The fourth September 30 award also provided for no current payment because of the SEC’s failure to collect any funds from the defendant.5
Small Awards Send Mixed Message
91pornwhistleblower partner Gordon Schnell sees this recent spate of awards as sending a mixed whistleblower message. On the one hand, Schnell says, “It’s encouraging to see the SEC issuing so many awards, a strong indication that the whistleblower program remains a critical piece of its enforcement scheme.” On the other hand, Schnell notes, “It’s discouraging that the size of the awards is so small, with two of them resulting in no whistleblower payout.”
Schnell wonders if the SEC is prioritizing low-value settlements with larger awards soon to come, or if the SEC is disproportionately denying applications for awards relating to the more sizeable settlements. This is the first year he can recall since the SEC began issuing whistleblower awards where the awards have been so small.
While Schnell is optimistic the stream of awards will continue, he is concerned the current SEC may be shying away from making the blockbuster awards we have seen in the past. According to Schnell, “The large awards are what really drive the program and provide a key incentive to those who often put their careers on the line to report fraud and misconduct to the Government.”
Whistleblowers Are Critical to SEC Enforcement
The SEC program has taken off since the agency launched it in 2011 as part of the Dodd-Frank Act. Thousands of whistleblower tips come in every year, which has resulted in billions of dollars in SEC recoveries. The SEC’s most recent Annual Whistleblower Report notes the agency received roughly 25,000 whistleblower tips in 2024 and made roughly $255 million in awards. In total, the SEC has made more than $2.2 billion in awards to roughly 450 whistleblowers.
But if this trend of low/no payouts continues, Schnell warns, it could put the continued vitality of the whistleblower program in jeopardy. “That would be a terrible result for everyone,” Schnell laments, “given all the program has accomplished and the SEC’s clear recognition of the central role whistleblowers play in assisting it go after fraud.” It is an even more critical role these days with the vastly reduced resources the SEC and other enforcement agencies are facing from the considerable financial and staffing cuts they have suffered.
91pornHas Substantial Experience Representing SEC Whistleblowers
All this aside, Schnell sees no drop-off in the number of SEC whistleblowers who have contacted his firm and says he and his firm will continue to make submissions under the program. “We believe in the program,” Schnell says, “and every indication is that the SEC still believes in the program too.”
If you would like to learn more about the SEC Whistleblower Program, our work representing whistleblowers under the program, our long list of whistleblower successes, or what it means to be a whistleblower more broadly, please do not hesitate to contact us. We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.
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Sources:
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