December 6, 2021

Volume XI, Number 340


December 03, 2021

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SEC Enforcement Report Underscores the Role of Whistleblowers in Detecting Wrongdoing and Protecting Investors

Today the SEC Division of Enforcement issued its annual report for FY 2020.  Although the number of cases that the SEC filed declined as compared to FY 2019, the financial remedies ordered set a new high.  The SEC obtained judgments and orders totaling approximately $4.68 billion in disgorgement and penalties and returned more than $600 million to harmed investors.

The SEC brought a diverse mix of 715 enforcement actions, including 405 standalone actions, addressing a broad range of significant issues, including:

  • issuer disclosure and accounting violations;

  • foreign bribery;

  • investment advisory issues;

  • securities offerings;

  • market manipulation;

  • insider trading; and

  • broker-dealer misconduct.

The SEC has also accelerated the pace of its investigations. In FY 2020, the median time to file an enforcement action was 21.6 months – a five-year best. In addition, the SEC obtained more than 475 bars or suspensions against market participants and suspended trading in the securities of 196 issuers.

The report notes the important contributions of whistleblower in advancing the SEC’s mandate to protect investors and maintain fair, orderly, and efficient markets:

Over the past ten years, the whistleblower program has been a critical component of the Commission’s efforts to detect wrongdoing and protect investors in the marketplace, particularly where fraud is concealed or difficult to detect. Enforcement actions from whistleblower tips have resulted in more than $2.5 billion in ordered financial remedies, including more than $1.4 billion in disgorgement of which almost $750 million has been, or is scheduled to be, returned to harmed investors. Recognizing the importance of rewarding meritorious whistleblowers in a timely manner, we have made efforts to streamline and substantially accelerate the evaluation of claims for whistleblower awards. These efforts paid off. Fiscal Year 2020 was a record-breaking year for the whistleblower program. The Commission issued awards totaling approximately $175 million to 39 individuals, both greater than any other year in the program’s history.

Due in part to fraud related to the pandemic, the SEC experienced a significant increase in tips, complaints, and referrals (TCRs), some of which are submitted to the SEC Office of the Whistleblower.  In FY 2020, the SEC over 23,650 TCRs, a substantial increase over the approximately 16,850 TCRs received in FY 2019.  In addition, the SEC increased the number of new inquiries and investigations, opening 1,181 new inquiries and investigations in FY  2020, compared to 1,082 in FY 2019.

FY 2020 has been an acitve year for the SEC whistleblower program, including the SEC’s adoption of amendments to its whistleblower rules. The following resources summarize recent key developments for SEC whistleblowers:

© 2021 Zuckerman LawNational Law Review, Volume X, Number 308

About this Author

Jason Zuckerman, Whistleblower Litigation Attorney, Washington DC  Law Firm

Described by the National Law Journal as a “leading whistleblower attorney,” Jason Zuckerman litigates whistleblowe r retaliation, whistleblower rewards, wrongful discharge, and other employment-related claims. His practice focuses on representing senior executives and senior professionals in high-...

(202) 262-8959
Matthew Stock, CPA, Auditor, Zuckerman Law Firm
Certified Public Accountant

Matthew Stock is the Director of the Whistleblower Rewards Practice at Zuckerman Law. He is an attorney, Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor. Mr. Stock has audited a broad range of industries, both domestically and internationally, including large public companies and financial institutions. As an auditor, Mr. Stock developed an expertise in financial statement analysis and fraud recognition.

At Zuckerman Law, Mr. Stock leverages his experience as an attorney, CPA, CFE and external auditor to...