On November 15, the U.S. Securities and Exchange Commission (SEC) announced its enforcement results for Fiscal Year 2022 (FY 2022). The agency revealed it recovered a record $6.9 billion in penalties and disgorgement over the course of FY 2022. In its announcement, the SEC highlights the role the agency’s whistleblower program played in its enforcement success.
“The SEC’s Office of the Whistleblower is an integral part of the Enforcement Program,” the report states. “In fiscal year 2022, the SEC issued approximately $229 million in 103 awards, making it the SEC’s second highest year in terms of dollar amounts and number of awards. The Whistleblower Program also received a record high number of whistleblower tips alleging wrongdoing—more than 12,300 whistleblower tips—in fiscal year 2022.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the agency with original information that leads to a successful enforcement action are entitled to an award of 10-30% of the funds collected by the government in the action.
The SEC set records for the most money awarded to whistleblowers and for the most individual awards in Fiscal Year 2021 when it awarded approximately $564 million to 108 individuals. Since issuing its first award in 2012, the SEC has issued over $1.3 billion in whistleblower awards.
In FY 2022 the SEC also filed enforcement actions against entities and individuals that violated the Dodd-Frank Act’s anti-retaliation provisions. In one action, the SEC charged the Brink’s company over language in confidentiality and nondisclosure agreements which restricted whistleblowing. In another case, the SEC charged David Hansen, co-founder and former Chief Information Officer of the technology company NS8, Inc., for impeding an individual from communicating with the SEC about potential securities violations.
Overall, the SEC filed 760 total enforcement actions in FY 2022, including 462 new, or “stand alone,” enforcement actions. According to the SEC, these stand alone enforcement actions “ran the gamut of conduct, from ‘first-of-their-kind’ actions to cases charging traditional securities law violations.” Emergent forms of misconduct highlighted by the SEC in its announcement include cryptocurrency fraud and environmental, social, and governance (ESG) violations.
“As reflected in these results, the Enforcement Division is working with a sense of urgency to protect investors, hold wrongdoers accountable and deter future misconduct in our financial markets,” said Gurbir S. Grewal, Director of the Division of Enforcement. “A centerpiece of those efforts is ensuring that we are using every tool in our toolkit, including penalties that have a deterrent effect and are viewed as more than the cost of doing business. While we set a Commission record this past fiscal year for total money ordered at $6.4 billion, including a record $4.2 billion in penalties, we don’t expect to break these records and set new ones each year because we expect behaviors to change. We expect compliance.”
“The breadth of issues covered in last year’s actions amply demonstrates Enforcement staff’s skill in uncovering violations, its resourcefulness in deploying the right investigative tools and case strategy, and, above all, its doggedness in pursuing wrongdoers and obtaining remedies that promote market integrity while helping to protect investors,” said Sanjay Wadhwa, Deputy Director of the Division of Enforcement. “From investigative attorneys and litigators to accountants, data scientists, investigators, and support staff, each member of Enforcement contributed to the many successes of the Division in the past fiscal year, and it is a great privilege to serve alongside them in protecting U.S. investors.”
SEC Announces Enforcement Results for FY22