On December 7, Better Markets, a nonprofit organization which promotes the public interest in the financial markets, published a new report on the U.S. Securities and Exchange Commission (SEC) Whistleblower Program. The 12-page report documents the program’s immense success and calls for other agencies to adopt similar whistleblower award programs.
“Corporate crime remains both rampant and difficult to uncover,” said Dennis M. Kelleher, Co-founder, President, and CEO of Better Markets. “However, the SEC’s whistleblower program has proven to be an incredibly effective law enforcement tool at incentivizing individuals to come forward and blow the whistle on illegal conduct that otherwise would not have been uncovered. By any measure, the SEC’s whistleblower program has been an unbelievable success.”
The report highlights some major statistics underscoring the SEC Whistleblower Program’s success. These include the 83,000 whistleblower tips received by the program, the more than $6 billion in sanctions collected thanks to the program, and the more than $1.5 billion that has been, or is scheduled to be, returned to investors.
“Amazingly, these billions in recoveries did not cost the taxpayers one dime,” the report states. “Whistleblowers only get paid if there is a successful prosecution and, even then, they are only paid from the funds recovered from the lawbreaker.”
“As of the end of fiscal year 2022, the SEC had paid more than $1.3 billion in whistleblower awards,” the report continues. “This means that, for every $1 paid to whistleblowers, the SEC obtained $4.84 in monetary sanctions. It also means that, for every $1 paid to whistleblowers, the SEEC was awarded $3.07 in disgorgement and returned $1.15 to harmed investors. That is an amazing record of success.”
The report also notes that FY 2023 was a record-setting year for the SEC Whistleblower Program. It received a record number of whistleblower tips and awarded a record total to whistleblowers, including the largest single award in program history.
Better Markets concludes its report by calling on Congress to establish whistleblower award programs at other agencies. The report notes that a bill pending in Congress would establish a whistleblower award program at the Consumer Financial Protection Bureau (CFPB).
Leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto recently wrote an article calling for the passage of the Financial Compensation for CFPB Whistleblowers Act.
“A whistleblower program covering violations of the CFPA would protect the public from insurance fraud, credit fraud, investment fraud, identity theft, mortgage fraud and other consumer fraud schemes, which all too often go unchecked,” writes Kohn. “Whistleblower award programs are a proven cornerstone to fighting fraud. We are using the full force of the law to protect investors. Don’t consumers deserve the same?”
Further Reading:
The SEC Whistleblower Program, a $6 Billion Success Story That Other Agencies Should Follow
Whistleblower Expert Calls for CFPB Whistleblower Award Program
SEC Whistleblower Program had a Record-Setting 2023 Fiscal Year