Getting Paid for Uncovering Fraud

On August 26, the U.S. Securities and Exchange Commission (SEC) adopted two amendments to the rules concerning their whistleblower program, enabling the agency to only increase and not decrease the award amount after further consideration and to expand the eligibility for a whistleblower award in connected non-SEC actions. "I think that these rules will strengthen our whistleblower program. That helps protect investors", said SEC Chair Gary Gensler. As our chart shows, reporting irregularities can pay off handsomely depending on the sanctions collected at the end of the investigation.

The biggest sum issued to whistleblowers by the SEC so far is $114 million, consisting of "approximately $52 million award in connection with the SEC case and an approximately $62 million award arising out of the related actions by another agency", according to an SEC press release. More recent cases include awards of $110 million, $50 million and $40 million paid out in September 2021, April 2021 and January 2022, respectively. The awards are financed from the funds collected through the sanction process and can range from 10 to 30 percent of the monetary sanctions collected.

The SEC's whistleblower program started in 2011, while the first payout consisting of $50,000 took place in August 2012. Overall, the agency issued $1.3 billion to 281 informants pointing the watchdog toward potential market manipulation and fraud. The SEC largely omits details on investigations to protect its sources, although in some cases, the whistleblowers themselves come forward. One of the more notable cases was that of a former Monsanto executive. In 2016, the ex-employee tipped off the agency on several irregularities in Monsanto's accounting, leading to an award of $22.5 million.