New York whistleblowers have submitted 950 tips to the Securities Exchange Commission since the creation of its whistleblower program.
Over nearly a decade, the program has led to more than $2 billion in monetary sanctions and $500 million in whistleblower awards.
In June 2020, the SEC awarded a record $50 million to a single whistleblower. Upon the announcement of the payout, Jane Norberg, who heads the Commission’s Office of the Whistleblower, said in a press release, “This award marks several milestones for the whistleblower program. . . [it] is the largest individual whistleblower award announced by the SEC since the inception of the program, and brings the total awarded to whistleblowers by the SEC to over $500 million, including over $100 million in this fiscal year alone. Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.”
Since 2012, 83 tipsters have succeeded in obtaining an SEC award. Whistleblowers who come forward with original and timely information that leads to a successful enforcement action can receive between 10 and 30 percent of the amount collected from fraudsters, as long as monetary sanctions exceed $1 million. The SEC whistleblower program was created to “better preserve the integrity of the United States' capital markets, and more swiftly hold accountable those responsible for unlawful conduct,” according to the agency’s website.
To encourage whistleblowers, the agency has created numerous protections for would-be tipsters. SEC rules provide that “employers may not discharge, demote, suspend, harass, or in any way discriminate against an employee in the terms and conditions of employment because the employee reported conduct that the employee reasonably believed violated the federal securities laws.”
SEC Whistleblower Awards 2020
The current year will go down in history as one of the most successful for SEC whistleblowers. In only six months, the agency has awarded tipsters 2x the yearly average based on the 2012-2019 period.
- Currency Manipulation Scheme - $50 Million Award
In June 2020, the SEC announced it had awarded $50 million to a whistleblower who “provided detailed, firsthand observations of misconduct by a company, which resulted in a successful enforcement action that returned a significant amount of money to harmed investors.” This is the largest SEC whistleblower award to date.
Though the SEC goes to great lengths to preserve the whistleblowers’ anonymity, this does not always deter journalists from trying to find out who they are. The Wall Street Journal reported on this particular case, revealing that the defendant was the Bank of New York Mellon (BKPRC), and the tipster was Grant Wilson, one of its traders. The WSJ said that, according to the whistleblower’s allegations, the bank systematically overcharged its clients on “currency trades”. Wilson left the bank in 2011, and his identity remained a secret until now.
With Wilson’s help, the SEC investigated BKPRC’s alleged misconduct for over a decade. In 2015, the bank paid $714 million in fines and restitution “to resolve allegations it defrauded pension funds and other clients related to currency transactions,” the WSJ reported, “Large pension funds that invested in global assets on behalf of teachers, police and other retirees learned they were given close to the least-favorable exchange rates of the day, with the bank profiting from the difference.”
The SEC said Wilson “provided a road map for the investigation,” becoming “a critical tool in the enforcement arsenal to combat fraud and protect investors.”
- Investment Fraud - $125,000 and $700,000 Awards
June was a prolific month for the SEC’s whistleblower program. Besides the record $50 million award, the Commission also awarded $125,000 to a whistleblower who helped “stop a fraudulent scheme that preyed on a vulnerable investor community” and $700,000 to an insider “whose significant information helped the agency bring a successful enforcement action that resulted in the return of money to harmed investors.” In this case, the Commission stated, the tipster reported the misconduct internally before involving the SEC.
- Securities Fraud - $2 Million Award
A whistleblower who helped a group of defrauded investors recover “much of their money,” received a $2 million SEC award in May 2020. According to the Chief of the SEC’s Office of the Whistleblower, the tipster’s information “helped the SEC stop an ongoing fraud in its tracks. . . and aided the Commission’s ability to obtain an asset freeze and prevent the dissipation of investor funds.”
- Securities Fraud - $18 Million
In late April, the SEC announced one of the largest awards of the year: $18 million paid to another insider who helped the agency recover millions of dollars on behalf of defrauded investors.
- Misconduct Occurring Overseas - $27 Million Award
In mid-April, the SEC awarded $27 million to a whistleblower who sounded the alarm about a foreign country’s securities fraud. This was one of the top 10 largest SEC awards to date.
- Securities Fraud - $2 Million
Earlier in April, another tipster was awarded $2 million for providing “vital information and assistance that substantially contributed to an ongoing investigation.” The nature of the misconduct was not publicized. According to Jane Norberg, Chief of the SEC’s Office of the Whistleblower, the insider in this case “expeditiously reported the information to the Commission and provided valuable assistance despite implied threats from the wrongdoers.”
- Fraud Reported by a Compliance Officer - $450,000 Award
In late March, a compliance officer who blew the whistle about securities fraud received a $450,000 SEC award. The whistleblower reported his concerns internally and then waited the mandatory 120 days before reporting to the SEC. “This is the SEC’s third whistleblower award to an individual who had compliance or internal audit responsibilities,” Norberg said in a statement. “The rules permit awards to compliance professionals in certain limited circumstances,” she explained, “the whistleblower made reasonable efforts to work within the company’s compliance structure, suffered unique hardships as a result, and reported to the Commission after the requisite time period had passed.”
- Securities Fraud - $570,000 Award
Earlier in March, the SEC awarded a combined $570,000 to two whistleblowers who helped the agency bring various enforcement actions resulting in substantial monetary sanctions. The first whistleblower was awarded $478,000, while the second one received $94,000. In a press release, Norberg emphasized that “The substantially higher award granted to the first whistleblower” demonstrates how crucial it is for insiders to report misconduct as early as possible.
- Securities Fraud - $1.6 Million
The third award announced in March was also the first of the year. A whistleblower received $1.6 million for providing “helpful assistance early in [a fraud investigation], preserving Commission time and resources.”
“The violations would have been difficult to detect without the whistleblower’s information and assistance,” the Chief of the SEC’s Office of the Whistleblower commented at the time.
New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.
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