The SEC (Securities Exchange Commission) announced a historic whistleblower award on June 4, 2020. A whistleblower who “provided detailed, firsthand observations of misconduct by a company” will receive “nearly $50 million” for their disclosure. The whistleblower provided accounts of misconduct at a company, and their disclosures are described as “detailed” and “firsthand.”
This award is the largest sum of money that has ever awarded under the SEC whistleblower program. Jane Norberg, the Chief of the SEC Office of the Whistleblower, revealed in the announcement that the total sum awarded to whistleblowers by the SEC is now over $500 million. Norberg states that “Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.”
Last week, the CFTC (Commodity Futures Trading Commission) announced that four whistleblowers would split a $2 million reward. After noticing suspicious activity, the four whistleblowers worked together to submit a “joint tip.” The CFTC notes that each of the four whistleblowers had provided information that “highlighted the economic impact of the suspicious activity they identified.” Additionally, the disclosure made by the four individuals not only led to an investigation conducted by the CFTC but also prompted another investigation “brought by other regulators.”
The swiftness with which these SEC whistleblower rewards announced just in these past few months is very encouraging: the sheer number of whistleblowers rewarded for their bravery is evident. The CFTC whistleblower award ruling is similarly heartening. As the CFTC Director of Enforcement James McDonald said, “In many instances, whistleblowers are in the best position to identify suspicious conduct.”
Whistleblowers can file anonymous and confidential reward claims under the Dodd-Frank Act, the Securities Exchange Act, and the Commodity Exchange Act. If a whistleblower’s original information results in a sanction, the law requires that the whistleblower a monetary award of between 10% and 30% of all fines and penalties collected.