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SEC awards $3.5 million to whistleblower
On March 8, the SEC announced that it awarded a whistleblower over $3.5 million for providing “critical” information that led to two successful SEC enforcement actions. According to the redacted order, the whistleblower provided information that prompted SEC staff to further investigate certain potential securities violations, which saved time and resources and helped advance settlement discussions. The SEC has awarded approximately $1.2 billion to 248 individuals since issuing its first whistleblower award in 2012.
SEC amends whistleblower program rules
On February 10, the SEC announced two amendments to the rules regarding its whistleblower program. According to the SEC, the first proposed amendment concerns award claims for related actions that would be otherwise covered by an alternative whistleblower program. The amendment would allow the Commission to pay whistleblower awards for certain actions brought by other entities, including designated federal agencies, in cases where those awards might otherwise be paid under the other entity's whistleblower program. The second amendment would affirm the Commission's authority under Rule 21F-6 to consider the dollar amount of a potential award for the limited purpose of increasing the award amount, and would eliminate the Commission’s authority to consider the dollar amount of a potential award for the purpose of decreasing an award. Comments are due 60 days after publication of the proposing release on the SEC’s website or 30 days after publication in the Federal Register.
SEC issues $40 million in whistleblower awards
On January 20, the SEC announced whistleblower awards totaling over $40 million to four individuals for providing information and assistance in three separate covered actions. According to the first redacted order, the SEC awarded approximately $37 million to two joint whistleblowers for providing evidence and ongoing assistance throughout the investigation, in addition to helping Commission staff identify information that contributed to the success of the action. According to the second redacted order, the SEC awarded approximately $1.8 million to an individual who provided information that prompted Commission staff to open the investigation. Additionally, the whistleblower continued to provide assistance by participating in interviews and giving additional documents. In the third redacted order, the SEC awarded approximately $1.5 million to a whistleblower for providing new information for Commission staff’s investigative strategy and significantly contributing to the success of the action. In addition, the whistleblower provided substantial and ongoing assistance by helping the Commission staff identify issues.
The SEC has awarded approximately $1.2 billion to 245 individuals since issuing its first award in 2012.
SEC issues multiple whistleblower awards
On January 10, the SEC announced that it awarded whistleblowers nearly $4 million for providing information and assistance in two separate investigations. According to the first redacted order, the whistleblower, who reported internally prior to reporting to the SEC, provided significant new information during an existing investigation that alerted the SEC to misconduct occurring overseas and permitted SEC staff to develop an efficient investigative plan to discover the full extent of the violations. The whistleblower received approximately $2.6 million. In the second redacted order, the SEC issued approximately $1.5 million to joint whistleblowers for providing substantial ongoing assistance throughout the investigation, such as by consulting telephonically with SEC staff and providing information about key witnesses, which led to the success of the investigation.
Earlier on January 6, the SEC announced that it awarded a whistleblower nearly $13 million for providing information and assistance that led to an investigation and successful SEC enforcement action. According to the redacted order, the whistleblower voluntarily provided original information to the Commission by meeting in person and helping SEC staff understand the mechanics of the fraudulent scheme, which enabled the Commission to stop an ongoing fraud, minimize investor losses, and return tens of millions of dollars to harmed investors.
The SEC has awarded approximately $1.2 billion to 241 individuals since issuing its first award in 2012.
CFPB asks tech workers to report AI lending discrimination
On December 15, the CFPB released a blog post calling on technology workers to report potential violations of federal consumer financial laws, including related to artificial intelligence (AI), as part of the Bureau’s efforts to adapt to the evolving financial landscape. According to the Bureau, AI has become a part of nearly every consumer financial market, creating the potential for intentional and unintentional discrimination within the decision-making process. As an example, while algorithmic mortgage underwriting has the potential to reduce discrimination, the Bureau warned that “researchers found discriminatory effects of these new technologies, as Black and Hispanic families have been more likely to be denied a mortgage compared to similarly situated white families.” The Bureau asked tech workers, including engineers, data scientists, and others with detailed knowledge of these algorithms and technologies, to report potential discrimination or other misconduct to the Bureau to help ensure these technologies are not being misused or abused. “Tech workers may have entered the field to change the world for the better, but then discover their work being misused or abused for unlawful ends,” CFPB Chief Technologist Erie Meyer stated. The Bureau updated its whistleblower webpage to provide additional information on the whistleblower submission process, and noted that fair lending experts and technologists will review submitted whistleblower tips. The webpage also describes the type of information the Bureau is seeking, and outlines whistleblower protections.
SEC awards $5 million to whistleblower
On December 6, the SEC announced that it awarded a whistleblower nearly $5 million for providing information that led to a successful SEC enforcement action. According to the redacted order, the whistleblower voluntarily provided original information to the Commission, which enabled staff to quickly and efficiently, among other things, develop a case theory, which ultimately led to the enforcement action and the return of millions of dollars to harmed investors.
The SEC has awarded approximately $1.2 billion to 236 individuals since issuing its first award in 2012.
SEC whistleblower awards total $10.4 million
On November 22, the SEC announced awards totaling approximately $10.4 million to several whistleblowers who provided original information and voluntary assistance in three separate SEC enforcement actions. According to the first redacted order, the SEC awarded two whistleblowers roughly $7.5 million for providing original, significant information leading to a successful action and alerting staff to misconduct occurring in different geographic areas. Both whistleblowers’ substantial, ongoing assistance also conserved significant Commission time and resources. Additionally, the first whistleblower received an award for contributing to a related action brought by another agency. In the second redacted order, the SEC awarded more than $2.4 million to two whistleblowers whose information led to a successful enforcement action. According to the SEC, the first whistleblower voluntarily provided information prompting the opening of the investigation and provided significant assistance throughout the investigation by providing key pieces of evidence. The second whistleblower provided new information that significantly contributed to the success of the enforcement action. In the third redacted order, the SEC awarded whistleblowers roughly $435,000. The first whistleblower alerted SEC staff to potentially fraudulent conduct, which helped prompt the opening of the investigation, and provided additional information during the investigation. The second whistleblower met with SEC staff and provided new, highly valuable information early in the investigation that was vital in helping the staff develop its theory of liability.
The SEC has awarded approximately $1.2 billion to 233 individuals since issuing its first award in 2012.
SEC awards $15 million to whistleblowers
On November 10, the SEC announced awards totaling over $15 million to two whistleblowers whose original information and voluntary assistance led to a successful SEC enforcement action. According to the redacted order, the first whistleblower alerted Commission staff to a fraudulent scheme, which prompted the opening of the investigation. While still substantial, the second whistleblower’s information was more limited in nature, and “had less of an impact on the success of the enforcement action,” as reflected in the respective amounts awarded. The SEC has awarded approximately $1.1 billion to 226 individuals since issuing its first award in 2012.
SEC awards $2 million to whistleblower
On October 29, the SEC announced that it awarded a whistleblower more than $2 million for providing information and assistance leading to a successful SEC enforcement action, as well as an action by the DOJ. According to the redacted order, the whistleblower voluntarily provided the same original information to the SEC and the DOJ, which prompted the opening of the investigations, as well as extensive ongoing assistance throughout the investigations. According to the SEC, the whistleblower had previously received an award for contributing to an SEC enforcement action based on the same information that supported the award for the related action, and was eligible for this award as a result of the recent amendments clarifying the types of actions that may be considered “related” under the whistleblower rules.
The SEC has awarded approximately $1.1 billion to 224 individuals since issuing its first award in 2012.
CFTC awards $200 million to whistleblower
On October 21, the CFTC announced an approximately $200 million whistleblower award to a claimant who reported “specific, credible, and timely” information that contributed to an already open investigation, which led to a successful Commodity Exchange Act (CEA) enforcement action, as well as to the success of two related actions by a U.S. federal regulator and a foreign regulator. The associated order notes that the claimant voluntarily provided original information that led the CFTC to important, direct evidence of wrongdoing. According to the announcement, “to qualify for an award, a whistleblower who significantly contributed to the success of an enforcement action must demonstrate that there is a ‘meaningful nexus’ between the information provided and the CFTC’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding.” The Commission determined the whistleblower met this standard. However, because the whistleblower’s information was never shared with the state regulator, the claim associated with a third related action by the state regulator was denied. In a statement released by CFTC Commissioner Dawn D. Stump, the Commissioner expressed her disagreement with the Commission’s award to the claimant with respect to the foreign regulator’s action. She concluded that there needs to be “an especially close look at cases where a whistleblower asks the Commission to tap its limited Customer Protection Fund for an award relating to an action by a foreign futures authority to address harm outside the United States.”
The CFTC has awarded approximately $300 million to whistleblowers since the enactment of its Whistleblower Program under Dodd-Frank, and whistleblower information has led to nearly $3 billion in monetary relief.