US SEC Issues Largest Ever Whistleblower Payout Of $279M
The United States Securities and Exchange Commission (SEC) has paid the largest sum ever from its whistleblower program. The agency…
The United States Securities and Exchange Commission (SEC) has paid the largest sum ever from its whistleblower program. The agency awarded $279mn to an unnamed person for revealing details about an undisclosed case. This payout more than doubles the previous record of $114mn.
- The SEC began its whistleblower program in May 2011. Under this program, whistleblowers can receive between 10% and 30% of monetary penalties imposed by the SEC for the violation they revealed; this applies only if the penalty is above $1mn.
Given the 10-30% figure, a $279mn payout implies that the SEC levied a penalty of between $930mn and $2.8bn in this whistleblower’s case. Only a few penalties in recent years fit that profile, such as in September 2022, when the SEC fined 16 Wall Street firms over $1bn for failing to preserve electronic records as legally required, or in May 2022, when financial services giant Allianz Global paid a $1bn+ fine for downplaying the risks of a trading strategy marketed to investors.
But there’s no confirmation on what case brought the record payout, and there’ll likely never be to protect the whistleblower’s identity (our guess would be the Allianz case).
- The SEC recovered a record $6.4bn in penalties and disgorgements in 2022, compared to $3.9bn in 2021. The agency’s biggest haul was $1.2bn in fines paid by banks that violated record-keeping requirements, and the runner-up was Allianz Global’s $1bn+ fine for deceiving investors.
- According to the SEC, the record payout’s recipient provided “sustained assistance including multiple interviews and written submissions” critical to a case but didn’t offer any more information.
U.S. Congress authorized the SEC’s whistleblower program in 2010, and the agency began giving awards in 2011; that year, it obtained $2.8bn in penalties and disgorgement. Total fines rose to $6.4bn in 2022, partly thanks to the whistleblower program. Probably, monetary reward is always the best motivation for revealing wrongdoing.
Update: A report from the Wall Street Journal said the $279mn award stemmed from a bribery case against Swedish telecoms firm Ericsson. In 2019, the firm paid a $1.1bn fine to U.S. authorities, including the SEC and Justice Department, to settle charges of bribing foreign government officials.