SEC Turns Previously-Shunned Whistleblower Program Into Handy Economic Stimulus - Dealbreaker

The COVID-19 epidemic appears likely to change a great deal about the way we live: How we work, how we travel, how we interact with each other, how we teach and learn, how we get medical care, how we vote (possibly in more ways than one), what we wear, where we make things, how we eat, and so on. It also seems to have not only changes but reversed a long-standing ambition of Jay Clayton’s Securities and Exchange Commission: to make whistleblowing as unattractive as the law allows.

On Monday, the SEC announced its latest award, to a recipient who will get almost $2 million for helping the agency probe an ongoing fraud and get investors their money back. That brings to over $64 million the amount paid to whistleblowers during the first seven months of the fiscal year that began in October—more than the SEC has awarded in any full year except 2018, according to an analysis of agency records. The 16 whistleblowers receiving money thus far exceeds the number in any previous year….

“We’ve made significant strides to streamline and accelerate the evaluation of claims, and the recent increase in the number of whistleblower awards reflects our efforts,” the SEC’s enforcement co-directors, Stephanie Avakian and Steven Peikin, said in a statement. “We are committed to rewarding the valuable contributions of whistleblowers in a timely and efficient manner.”

Whether this is a true change of heart due to a realization that whistleblowers can actually be useful, an ad-hoc stimulus program for our benighted times, or simply SEC bureaucrats’ reaction to boredom, and just how long the change will last, are, as so much else, unclear. But, like COVID-19 itself, it’s catching on.

The Commodity Futures Trading Commission today announced a whistleblower award exceeding $2 million to be shared among four whistleblowers. The CFTC granted the whistleblowers’ award applications for both a CFTC action and related actions brought by another regulator…. “The four whistleblowers here synthesized information for the CFTC that highlighted the economic impact of the suspicious activity they identified,” said CFTC Whistleblower Office Director Christopher Ehrman. “The whistleblowers’ initiative not only led to the CFTC’s investigation, but also to related investigations brought by other regulators.”

SEC Ramps Up Whistleblower Awards [WSJ]
CFTC Awards More Than $2 Million to Four Whistleblowers [press release]