Since the program’s inception in 2011, the SEC Whistleblower Program has become one of the sharpest tools in the Commission’s enforcement arsenal, providing authorities with early and actionable intelligence on violations of the federal securities laws. The agency’s 2024 report to Congress provides crucial insight into the office’s nearly 25,000 whistleblower submissions coming from across the United States and around the world. The report covers the agency’s fiscal year, which runs from October 2023 through September 2024.
With more than $255 million paid to eligible whistleblowers this year, the total awarded to whistleblowers since the program’s launch is an astonishing $2.2 billion.
Individuals Continue to Report Major Cases of Securities Fraud
Underscoring the program’s wide appeal, in FY2024, the SEC received 396 applications for awards, a new record. In total, it paid more than $255 million to 47 individual whistleblowers, the third largest payout in the program’s history. This was a decrease from 2023, when the Commission awarded nearly $600 million – its most ever – to 68 individuals.
With eligible whistleblowers earning 10-30% of monetary sanctions collected in an enforcement action (where total damages exceed $1 million), it’s not surprising that 2024 included major awards. Two individuals split an award of approximately $98 million – the fifth largest award in program history. In addition, in July alone, the Commission awarded a staggering $75 million.
Most Common Securities Violations
Out of the thousands of tips that the SEC receives, in FY2024, the most common types of securities violations reported by whistleblowers were:
- Manipulation: Misleading investors by creating artificial market conditions that don’t reflect genuine supply and demand;
- Offering fraud: Misrepresenting facts to potential investors, such as by making false or misleading statements about a company;
- Corporate disclosure and financials: Omitting or misstating information in routine disclosures to misrepresent a company’s financial condition; and
- Initial coin offerings, cryptocurrencies, and crypto assets: Important for policing newly emerging and often complex markets for digital assets.
Geographic Diversity
As markets have a global footprint, so too does the long arm of the Commission’s enforcement. In the United States, whistleblower submissions came from across the country, with South Carolina, Florida, California, Texas, and New York generating the highest number of tips. Internationally, the SEC received tips from across the globe, with the highest concentration from Canada, the United Kingdom, India, Australia, and Germany. India, in particular, showed a marked increase in tips over FY2023, edging out Australia and Germany.
Truthtellers Cannot be Silenced
The SEC whistleblower program is a public-private partnership like no other, calling upon everyday individuals – including employees – to report illegal behavior that harms investors and erodes public faith in the markets. On the government’s side, Dodd-Frank provides the SEC with additional power to protect whistleblowers from those who seek to silence or punish them.
Employees continue to be the strongest voice for good – representing 62% of successful whistleblowers – and the SEC is serious about protecting them. The agency pursued seven public companies for using employment, separation, and other agreements that required employees to waive claims to potential awards. Those entities coughed up penalties in excess of $3 million. In addition, the SEC brought five anti-retaliation actions.
No individual or entity can interfere with a person’s right to communicate with their government. Using its teeth under the Program, the Commission brought 11 actions against those who sought to quiet whistleblowers. Remarkably, efforts to impede whistleblowing extend beyond a company’s workforce and into its client population. By way of example, J.P. Morgan Securities paid an $18 million penalty for impeding hundreds of advisory clients and brokerage customers from voluntarily contacting the SEC in connection with settlements with the firm relating to potential securities law violations.
The work continues – for those who bravely come forward to report misconduct, as well as for the SEC in its continued work to protect whistleblowers and punish wrongdoers. For more information on the SEC whistleblower program, or our work on behalf of whistleblowers, please reach out to Tammy Marzigliano or Dave Jochnowitz, co-chairs of Outten & Golden’s Whistleblower & Retaliation Practice Group.
