SEC plans to review Whistleblower Program as it approaches $1 billion in awards

Rick Steves

The SEC Whistleblower Program has allowed the SEC to recoup nearly $3 billion in monetary sanctions and the whistleblower program has awarded approximately $942 million to 186 individuals.

SEC Chair Gensler spoke before the National Whistleblower Center and reminded the critical role whistleblowers play in law enforcement efforts.

While reemphasizing his commitment to the agency’s whistleblower program, the top official revealed he plans to review the whistleblower program in order to improve its efficiency and effectiveness.

“The tips, complaints, and referrals that whistleblowers provide are crucial to the Securities and Exchange Commission as we enforce the rules of the road for our capital markets. Each week, when I see the Commission’s enforcement actions, I’m reminded how the whistleblower program helps us be better cops on the beat, execute our mission, and protect investors from misconduct”, said SEC Chair Gary Gensler.

The head of the Securities and Exchange Commission asked staff to examine whether and how the program can be further strengthened to ensure misconduct within the remit of the SEC is identified, addressed, and stopped.

SEC’s ‘Whistleblower Awards’ keep getting bigger and bigger

The agency wants to ensure that whistleblowers are empowered to come forward when they see misbehavior and that they are appropriately compensated according to the framework established by Congress, and that those who report wrongdoing are protected by retaliation.

Siri Nelson, Executive Director at the National Whistleblower Center, welcomed the program review. “While the program has been an immense success, there are areas, such as the processing time for award claims, which need improvement. The SEC Whistleblower Program should be consistently reviewed to ensure that it best protects whistleblowers and serves the interest of the American public.”

“NWC plans on engaging in the discussion around potential reforms and will issue formal comments soon after National Whistleblower Day. We would be happy to meet with the Chairman, the Commissioners, and other members of the SEC Commission Staff”, Nelson added.

The SEC Whistleblower Program has allowed the SEC to recoup nearly $3 billion in monetary sanctions and the whistleblower program has awarded approximately $942 million to 186 individuals.

Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million. The rise of both the cryptocurrency market and crypto scams should be one of the leading causes of the record-breaking figures awarded by the regulator.

The SEC does not provide information regarding the whistleblowers nor the cases they helped with, but ever since initial coin offerings became the new fad in 2017, the SEC keeps on reporting more and more whistleblower awards with bigger and bigger prizes.

In 2020, the number of awards issued to whistleblowers tripled and the Commission received a record number of whistleblower tips. This year is expected to beat all those figures.

In September 2020, the SEC approved a number of rule changes to its whistleblower program. A number of these changes, including altered rules on “related-action” awards and stricter guidance on awards for independent analysis, were criticized by whistleblower advocates.

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