SEC whistleblower payouts top $1 billion total as securities watchdog announces near-record award

U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee oversight hearing on the SEC on Capitol Hill in Washington, September 14, 2021.

Evelyn Hockstein | Pool | Reuters

The Securities and Exchange Commission on Wednesday said the total amount of payouts it had made to whistleblowers had topped $1 billion after the financial watchdog issued its second-largest ever award to a person for flagging wrongdoing.

The SEC said one person this week was paid a combined $110 million for information and assistance that led to successful enforcement actions by the SEC and other entities.

About $40 million of that payout was connected to an SEC case, with the remainder from related actions by another, unidentified agency.

That total award was close to the record $114 million award issued last October by the regulator, which began paying bounties to whistleblowers in 2012.

Another individual recently received a $4 million award for whistleblowing, the SEC said, bringing the tally of such payouts this year to more than $500 million.

Earlier this year, the third-biggest whistleblower award, for $50 million, was issued.

The SEC by law does not disclose the identity of whistleblowers or information that could lead to revealing their identity.

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Since the program began, the SEC has paid 207 whistleblowers more than $1.07 billion, according to the agency, whose mission is to protect investors and maintain fair and efficient markets.

Those payouts, which range in value from 10% to 30% of monetary sanctions imposed by the SEC that exceed $1 million, are funded by the sanctions, not by investors who were harmed.

The SEC said the information provided by whistleblowers since the program began has resulted in more than $4.8 billion in financial remedies.

“We just hit a milestone,” SEC Chairman Gary Gensler said in a tweeted video announcing the billion-dollar payout threshold had been topped.

“Every single one of the whistleblowers has provided an important service,” Gensler said. “When I see the commission’s enforcement actions each week, I am reminded of how the whistleblower program helps us be better cops on the beat, execute our mission, and protect investors from misconduct.”

Gensler on that video encouraged would-be whistleblowers to visit the SEC’s tip website: www.sec.gov/whistleblower.

Earlier Wednesday, during an interview with CNBC’s “Squawk on the Street,” Gensler said the SEC is dealing with a range of challenging enforcement issues even as it has up to 5% fewer staff members than five years ago.

“We’ve got an IPO boom, we have a SPAC boom, we have cryptocurrencies to deal with,” Gensler said. “I’d like to at least get back [staff level] to where we were in 2016 and I think we should probably be 5% or 10% larger than that.”

Gensler told the Senate on Tuesday that he needs “a lot more people” to help deal with thousands of new digital assets, such as cryptocurrencies.

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