On November 15, 2021, the US Securities and Exchange Commission filed its 2021 Annual Report to Congress on the SEC’s Whistleblower Program, reporting a record-breaking year in which the Office of the Whistleblower (OWB) issued more awards to more individuals than the sum of all prior years combined. The SEC reported that in FY 2021, which was October 1, 2020 through September 30, 2021, it issued awards of more than $564 million to 108 individuals; that is greater than the total of all awards issued between FY 2011 and FY 2020 in which approximately $562 million was awarded to 106 whistleblowers. In total, more than $1.1 billion has been awarded to 214 whistleblowers since the whistleblower program’s inception in 2011. The enforcement matters brought based on these whistleblowers’ information have resulted in nearly $5 billion in monetary sanctions.
In addition to the record-breaking award totals, in FY 2021 the SEC received a record number of whistleblower tips. The SEC received more than 12,200 tips from individuals from 99 foreign countries as well as from every state in the US. The approximately 12,000 tips represent a roughly 75 percent increase over FY 2020, which had the second highest number of tips. As previously discussed on the Willkie Compliance Concourse, in FY 2021 the SEC issued its two largest awards to date: an October 2020 award of $114 million to one whistleblower who provided information and assistance on two successful enforcement actions and another $114 million award granted in September 2021 to two whistleblowers, one of whom not only assisted the SEC with a successful enforcement action but also provided information that led to two enforcement actions for another undisclosed agency.
The 2021 Annual Report also highlighted actions the SEC brought to punish companies for attempting to restrict employees’ ability to provide whistleblower tips to the SEC. For example, the SEC instituted a cease-and-desist proceeding against Guggenheim Securities, LLC in June 2021 because, according to the SEC, the company and its majority indirect owner had policies in place that, among other things, “strictly prohibited” employees “from initiating contact with any Regulator without prior approval from the Legal or Compliance Department.” The policy further stated that any violations of the policy could be grounds for disciplinary action, according to the SEC. The company paid a civil monetary penalty of $208,912 to settle the matter. In another example, SEC v. GPB Capital Holdings, LLC, the SEC alleged that certain confidentiality and separation agreements into which GPB Capital entered contained provisions that prohibited individuals from reporting securities law violations to the SEC. The SEC further alleged that the company retaliated against an employee who raised concerns internally and who filed a whistleblower complaint to the SEC. That case is pending.
Acting Chief of the OWB Emily Pasquinelli stated in the report that the whistleblower program’s success in FY 2021 demonstrated the “vital” role that whistleblowers play in the SEC’s enforcement efforts. She added that she hoped the significant number and size of awards made in FY 2021 would “encourage” other individuals to report whistleblower tips to the SEC.