Utah Whistleblower Hotline

Who becomes a whistleblower?

The Security and Exchange Commission’s Office of the Whistleblower released its annual report on whistleblowers which showed that whistleblower tips are on the rise. The Office received almost 4,000 tips in 2015 – a 30% rise in the number of whistleblower tips since 2012, – and paid out about $37 million to whistleblowers. Whistleblowers are eligible for financial awards if a tip results in a fine or judgment totaling over $1 million.

“We believe this uptick in whistleblower award claims is attributable to the increased public awareness of the SEC’s whistleblower program and in response to the tens of millions of dollars that have been paid to whistleblowers under the program,” Sean X. McKessy, the chief of the SEC’s Office of the Whistleblower said in a statement.

Over the life of the program, which was created by the Dodd-Frank Act of 2010, the SEC has paid more than $52 million to 22 tipsters, the agency said. During the 2015 fiscal year, which ended Sept. 30, the SEC paid out roughly $37 million to whistleblowers who alerted the agency to major frauds and other misconduct.

The amount an individual can receive is determined by the total monetary penalty, but whistleblowers receive anywhere from 10% – 30% of the total amount of the sanction.

The awards are paid out of a separate account maintained by the SEC and funded by enforcement sanctions. This special whistleblower account finished the last fiscal year with a balance of about $400 million.

Why does someone become a whistleblower?

The report also shared some insight on where the whistleblower tips originated: about half of the tips came from former or current employees while the rest came from a variety of sources outside the companies. Of the tips that came from employees, 8 out of 10 of those whistleblowers had attempted to resolve issues internally before blowing the whistle.

An interesting finding from the report is that, while the financial awards can be significant, money is not the deciding factor for who becomes a whistleblower. Of the tips that came from employees, 8 out of 10 of those whistleblowers had attempted to resolve issues internally before becoming whistleblowers

Among the more common whistleblower tips reported to the SEC: corporate disclosures and financials, fraud, manipulation, and – not surprisingly – insider trading.

During the last fiscal year, which ended Sept. 30, the SEC paid out roughly $37 million to whistleblowers who alerted the agency to major frauds and other misconduct. Over the life of the program, which was created by the Dodd-Frank Act of 2010, the SEC has paid more than $52 million to 22 tipsters, the agency said.

Awards are determined by the total monetary sanction, where whistleblowers can receive anywhere from 10%-30% of the penalty. And the award money is pulled from a federal fund that has over $425 million set aside.

The SEC has paid out over $54 million in award money to 22 whistleblowers since the program went into effect in August of 2011.

If you or someone you know is aware of misconduct or fraud, protect your rights.  Contact our whistleblower attorneys team here.

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