On October 25, Gary Gensler, Chair of the U.S. Securities and Exchange Commission, revealed that the SEC Whistleblower Program received a record 18,000 whistleblower tips in the 2023 Fiscal Year.
“The public’s tips, complaints, and referrals (TCRs) are essential to our work as a cop on the beat,” Gensler stated during remarks at the 2023 Securities Enforcement Forum. “We received more than 40,000 TCRs in the previous fiscal year, including more than 18,000 from those critical whistleblowers.”
In the 2022 Fiscal Year, the SEC set a record with 12,300 whistleblower tips received. The 2023 total thus demonstrates the continuous rapid growth of the program. In Fiscal Year 2020, the record for most tips received a year was 6,911.
“Whistleblowers are accountability’s cornerstone,” says whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto (KKC). “Chair Gensler’s comments further support the need for Congress to pass the bipartisan SEC Whistleblower Reform Act of 2023. Without the Reform Act whistleblowers will continue to wait for years in order to obtain any compensation, and those facing retaliation often will have no remedy.”
On March 15, Senators Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) introduced the SEC Whistleblower Reform Act of 2023 in order to further strengthen the highly successful SEC Whistleblower Program. The bill bolsters the Dodd-Frank Act’s anti-retaliation protections and ensures that the agency processes award claims in a more timely manner.
According to Allison Herren Lee, former SEC Commissioner and currently Of Counsel at KKC, the SEC Whistleblower Reform Act of 2023 “will help ensure that the SEC Whistleblower Program remains an indispensable tool in the Commission’s efforts to police wrongdoing and protect investors.”
During his remarks, Gensler also highlighted recent enforcement actions by the SEC over language in employment agreements which impeded whistleblowing.
“The exit agreements forced employees to choose between violating a separation agreement by providing information to the SEC or withholding information that could benefit victims of a securities law violation,” Gensler said. “That violates longstanding whistleblower protections.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily report original information that leads to a successful enforcement action, are entitled to monetary awards of 10-30% of the funds collected by the government in the enforcement action. Since it was established in 2010, the program has recovered over $6.3 billion in sanctions from fraudsters and awarded over $1.5 billion to whistleblowers.