The Securities and Exchange Commission (SEC) issued its annual report on the SEC Whistleblower Program yesterday. According to the report, 2018 was a “record-breaking year” for the SEC whistleblower program. The program gave its largest whistleblower award to date, $84 million. It doled out more money this past year to deserving whistleblowers than it has in all prior years combined, $168 million.
SEC Whistleblower disclosures recovered over $1.7 billion to the U.S. Treasury through monetary sanctions, with an estimated $432 million returned to investors. Whistleblowers have been awarded $326 million since the beginning of the SEC whistleblower program. Some of those receiving whistleblower rewards were company outsiders and individuals residing overseas.
The successes outlined in the report are a clear indicator that paying whistleblower incentives is key to rooting out violations of securities laws. This is why the SEC proposed rule changes in July caused uproar and were met extensive criticism by the public. Critics of the proposed changes, like whistleblower attorney Stephen M. Kohn, stressed that they would have the unintended consequences of disincentivizing high level corporate whistleblowers and threaten the highly successful SEC whistleblower program.
In response to the annual report on the SEC Whistleblower Program, Kohn stated:
“The SEC Whistleblower Office continue to do an outstanding job promoting its program and rewarding whistleblowers. Unfortunately, the Commission has proposed new rules that will severely undercut the progress that has been made at the SEC. We must work together to ensure that the new rules, that would limit rewards and discourage reporting, are not approved by the Commission.”
The report states that Commission staff is still reviewing the hundreds of comments it received.
Read: 2018 Annual Report to Congress: SEC Whistleblower Program