In its Annual Report to Congress, the SEC Office of the Whistleblower reported that it had another recording-breaking year for both the number of tips received and whistleblower awards paid. The 12,200 tips received in fiscal year 2021 represented a 76 percent increase from last year and tips were received from over 99 foreign countries. 108 whistleblowers were awarded over $564 million in fiscal year 2021, an amount larger than in all previous years combined.
Since the program's inception, enforcement matters brought using information from whistleblowers have resulted in orders for nearly $5 billion in monetary sanctions, of which more than $1.3 billion has been, or is scheduled to be, returned to harmed investors.
Commentary Lex Urban
At this point no one should be surprised by the record-breaking success of the SEC Whistleblower program. However, some of the larger enforcement actions this year stemming from whistleblower tips still featured companies ignoring numerous internal reports of potential misconduct. The monetary incentives for whistleblowers are too high to think that potential problems can be quelled with inaction, especially given that individuals who tangentially participated in actual misconduct can collect tens of millions of dollars for providing information to the government. Companies need to ensure adequate internal reporting mechanisms for suspected misconduct, and procedures for addressing those claims. Anonymous internal reporting options that are managed by an independent function at least give companies the chance to self-report and significantly reduce a potential penalty.
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