October 20, 2021

Volume XI, Number 293

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SEC Releases Financial Report Confirming the Unprecedented Success of its Whistleblower Program

The Securities and Exchange Commission made waves in 2020 by issuing its largest ever Whistleblower Award and revising the SEC Whistleblower Program Rules to increase the efficiency of the program. The whistleblower program has been widely celebrated, and on November 16, 2020, the Whistleblower program published its Annual Report officially confirming the success of the program.

It was notable that all of the commissioners, including Chairman Clayton, celebrated the success of the Commission’s whistleblower program when the Commission adopted the final rule amendments to the whistleblower program in September 2020. This success was reflected in the Commission’s announcement that Chairman Clayton will leave the Commission at the end of the year. 

The success of the program is apparent in the report, which confirms that $2.7 billion in total monetary sanctions were triggered by whistleblower disclosures in FY 2020, including "more than $1.5 billion in disgorgement of ill-gotten gains and interest, of which more than $850 million has been, or is scheduled to be, returned to harmed investors."  In all, whistleblowers were paid over $750 million. 

Whistleblower attorney, Stephen M. Kohn, a partner at Kohn, Kohn and Colapinto, issued the following statement: "The SEC program is a tremendous success" and that "The Commission has worked on a bi-partisan basis to hold Wall Street fraudsters accountable and protect the small investors.  This is a model for other whistleblower programs to follow, and a testament to the importance of rewarding whistleblowers for their inside information." Further, Kohn said that "[a]ll of the SEC Commissioners, its enforcement staff and the staff of the Office of the Whistleblower deserve the thanks from all Americans who have significantly benefited from their excellent work."   

On November 2, 2020, the Commission released its Enforcement Division annual report. The report provides a comprehensive overview of the SEC’s enforcement efforts of the past year, including the successes of its whistleblower program. FY 2020 was a record-setting year for the SEC’s Division of Enforcement, specifically the SEC Whistleblower Program.

The report states that in FY 2020, the SEC brought 715 enforcement actions, including 405 standalone actions. According to the report, “through these actions, the SEC obtained judgments and orders totaling approximately $4.68 billion in disgorgement and penalties – a record amount for the Commission – and returned more than $600 million to harmed investors.” As the report notes, since it was established in 2010, the whistleblower program has been a critical component in the SEC’s enforcement efforts. 

FY 2020 was a record-setting year for the SEC Whistleblower Program. The SEC issued whistleblower awards totaling approximately $175 million to 39 individuals. Both of these totals are greater than those of any other year in program history. Additionally, the number of individuals awarded, 39, is a 200% increase over the next-highest number of individuals who received awards in a single year.

Taken together, these reports confirm the significance of whistleblower contributions to effective enforcement of financial regulations. With the support of whistleblowers worldwide, the SEC has been able to obtain billions of dollars in judgments against fraudsters – sending a powerful message to the regulated community.

A recent Marist Poll conducted by Whistleblower News Network highlighted that increasing whistleblower protections is a widely held value across party lines. This bi-partisan issue should be a priority for President-elect Joe Biden. The hugely successful SEC Whistleblower Program is a prime example of the power whistleblowers hold in supporting regulators and other law enforcement activities. With the adequate protections and robust award programs, whistleblowers are motivated to come forward about crimes that otherwise may have never been detected.

Copyright Kohn, Kohn & Colapinto, LLP 2021. All Rights Reserved.National Law Review, Volume X, Number 322
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About this Author

Siri Nelson Associate Attorney Kohn Kohn Colapinto Law Firm
Associate Attorney

Siri Nelson is an associate attorney and policy counsel at Kohn, Kohn Colapinto, where she specializes in SEC/CFTC whistleblower law and False Claims Act/Qui Tam rewards.

Nelson is also a professor at Northeastern University School of Law.  Nelson was the recipient of the highly prestigious and competitive Estelle S. Kohn Memorial Fellowship awarded by Northeastern University School of Law.  She graduated from Northeastern University School of Law in May 2019. Ms. Nelson graduated summa cum laude from the College of New Rochelle, School of New Resources, with a B.A. in...

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