On April 14, the U.S. Senate voted 53-45 to confirm Gary Gensler as the Chair of the U.S. Securities and Exchange Commission (SEC). Gensler, who was nominated by President Biden in January, takes over leadership of the agency from Acting Chair Allison Lee. Under previous Chairs, the SEC has developed a world-class whistleblower program, responsible for collecting billions of dollars from fraudsters and awarding hundreds of millions of dollars to whistleblowers.
Gensler is the former Chairman of the Commodities Futures Trading Commission (CFTC) and recently pledged to ensure the continued success of the SEC Whistleblower Program. In March, Gensler formally responded to questions filed by Senator Chuck Grassley (R-IA) about how, if confirmed, he would oversee the program if confirmed as SEC Chair.
In a series of written answers, Gensler committed to strongly supporting whistleblowers who file cases under the Dodd-Frank Act’s whistleblower reward law. In one answer, Gensler stated: “If confirmed to lead the SEC, I will build on the work of past Chairs to ensure continued strength in the whistleblower program.”
In his answers, Gensler additionally committed to working with SEC Commissioners and staff, whistleblower advocates, and Congress to “reduce processing times in SEC whistleblower award determinations.” He said he would “request the resources necessary from congressional appropriators to ensure that the Office of the Whistleblower can fulfil its statutory mandates.”
“This is great news for whistleblowers,” said Stephen M. Kohn, a whistleblower attorney with the law firm of Kohn, Kohn and Colapinto and Chairman of the Board of Directors of the National Whistleblower Center. “Mr. Gensler’s answers are the strongest statements of support for whistleblowers ever given by an incoming SEC Chairman. They indicate that the SEC reward program will become even stronger under Gensler’s leadership,” Kohn added.
“We are especially pleased that Mr. Gensler voiced support for full funding for the SEC’s whistleblower program, along with other needed improvements. This support includes instituting procedures to ensure that whistleblower cases are timely decided. Currently, cases can be delayed for years due to bureaucratic and budgetary roadblocks,” according to Kohn, who represents numerous SEC whistleblowers.
Established in 2010 with the passage of the Dodd-Frank Act, the SEC Whistleblower Program provides both anti-retaliation protections and financial rewards to corporate whistleblowers. The program has become an invaluable tool for the SEC’s enforcement efforts. In its 2020 Annual Report to Congress, the SEC Whistleblower Program announced that in the program’s history $2.7 billion in total monetary sanctions have been triggered by whistleblower disclosures. Former SEC Chair Jay Clayton stated that the whistleblower program is “a critical component of the Commission’s efforts to detect wrongdoing… particularly where fraud is well-hidden or difficult to detect.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC with original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. The SEC pays awards through a fund entirely financed through monetary sanctions paid to the SEC by securities law violators. Since issuing its first award in 2012, the SEC has awarded approximately $762 million to 148 individuals.
Gensler takes over leadership of the agency in the midst of a record year for the whistleblower program. Since the 2021 fiscal year began on October 1, 2020, the SEC has awarded approximately $202 million to 41 individuals – both figures are fiscal records for the program. The previous records for total amount awarded and number of individuals awarded were set in the 2020 fiscal year, when the SEC awarded approximately $175 million to 39 whistleblowers.