SEC Whistleblower Award Total Reaches Record High

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By Antoinette Gartrell

Nov. 16 — The Securities and Exchange Commission’s Office of the Whistleblower shelled out a record $57 million in in fiscal year 2016, according to the agency’s 2016 annual report to Congress on the bounty program, released Nov. 15.

The figure is more than all the awards issued in previous years combined, the report showed. Additionally, six of the 10 highest awards to date were made in fiscal year 2016.

New York lawyer Jordan A. Thomas of Labaton Sucharow LLP said he thinks the SEC has “hit its stride” in terms of awards. He said he expects a similar level of awards to be made in future years.

The bounty program—established under Section 922 of the Dodd-Frank Act—grants financial awards to qualified individuals who tip the SEC to information that results in penalties and other sanctions totaling $1 million or more.

Tip Highlights.

Whistle-blower tips, which have been steadily increasing, are also at an all-time high. In fiscal year 2016, the SEC received approximately 4,218 tips, a more than 40 percent increase since fiscal year 2012, the first year for which full-year data is available.

Although an individual doesn’t have to be an employee of the company that allegedly committed the violation to be eligible for an award, almost 65 percent of awards to date have been made to corporate insiders. Of that figure, approximately 80 percent raised their concerns internally before reporting to the commission, the report said.

California, Florida, New York and Ohio yielded the highest number of tips in fiscal year 2016. The “troubling” amount of tips from Ohio may signal a combination of increased illegal activity and greater awareness of the SEC program, Thomas said.

Most whistle-blower tips come from the U.S. Foreign countries that generated the most tips included Canada, the United Kingdom and Australia.

To contact the reporter on this story: Antoinette Gartrell in Washington at agartrell@bna.com

To contact the editor responsible for this story: Phyllis Diamond at PDiamond@bna.com

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