Under the SEC Whistleblower Reward Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) over $1 million. A whistleblower may receive between 10% to 30% of the monetary sanctions collected. Since 2012, the SEC has issued more than $1 billion in awards to whistleblowers. The most significant SEC whistleblower awards to date are $114 million and $110 million. Most common tips to the SEC Office of the Whistleblower involve:
- Accounting fraud;
- Investment and securities fraud;
- Insider trading;
- Foreign bribery and other FCPA violations;
- EB-5 investment fraud;
- Manipulation of a security’s price or volume;
- Fraudulent securities offerings and Ponzi schemes;
- Hedge fund fraud;
- Unregistered securities offerings;
- Investment adviser fraud;
- Broker-dealer anti-money laundering program violations;
- False or misleading statements about a company or investment;
- Inadequate internal controls;
- Deceptive non-GAAP financials;
- Improper revenue recognition;
- Violations of auditor independence rules;
- Misleading or incomplete cybersecurity disclosures; and
- Blockchain and cryptocurrency fraud.
The SEC whistleblower program has become a very effective enforcement tool for the SEC. The program allows whistleblowers to submit anonymous tips to the SEC if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation. Here is a list of seven of the largest SEC whistleblowers rewards given in 2020:
- $27 million: The SEC issued (April 16) a $27 million award to a whistleblower who alerted the agency to misconduct occurring, in part, overseas. After providing the tip to the SEC, the whistleblower provided critical investigative leads that advanced the investigation and saved significant SEC resources.
- $5 million: The SEC issued (April 20) a $5 million award to a whistleblower who provided critical information that led to successful enforcement action. According to the SEC, the whistleblower provided critical evidence of wrongdoing, which helped save time and resources in the SEC’s investigation, and the whistleblower suffered a unique hardship due to raising concerns internally.
- $3.8 million: The SEC issued (July 14) a $3.8 million award to a whistleblower that provided new information during an ongoing investigation into a fraudulent scheme. According to the order announcing the award, the knowledge that the whistleblower provided “helped the Commission halt an ongoing fraud and return millions of dollars to harmed investors.”
- $50 million: On June 4, the SEC announced its then largest-ever whistleblower award of $50 million to a whistleblower. In the press release announcing the award, the Chief of the SEC’s Office of the Whistleblower, Jane Norberg, stated: “This award is the largest individual whistleblower award announced by the SEC since the inception of the program, and brings the total awarded to whistleblowers by the SEC to over $500 million, including over $100 million in this fiscal year alone. Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.”
- $114 million: On October 22, the SEC announced its largest-ever whistleblower award of $114 million to a whistleblower whose information and “substantial, ongoing assistance” led to the successful enforcement of SEC and related actions. The award consisted of an approximately $52 million award in connection with the SEC case and a roughly $62 million award arising out of the related actions by another agency.
- $18 million: On April 28, the SEC announced an award of more than $18 million to a whistleblower whose tip prompted an enforcement action that returned millions of dollars to retail investors.
- $9.2 million: On February 23, the whistleblower provided important information about an ongoing fraud to the SEC that enabled a large amount of money to be returned to investors harmed by the fraud. In addition, the whistleblower information led to successful, related actions by the DOJ, one of which was a non-prosecution agreement (NPA) or deferred prosecution agreement (DPA). The award marks the first SEC whistleblower “related action” award based on an NPA or DPA with the DOJ since amendments to the SEC’s whistleblower program rules became effective on December 7, 2020.
- $28 million: On November 3, the SEC issued a $28 million award to a whistleblower who “provided significant information that aided the SEC in bringing a successful enforcement action.” According to the press release announcing the award, the whistleblower “internally reported information that prompted the company to initiate an internal investigation, and saved the staff time and resources by providing testimony and identifying a key witness.”
ISO 37002 Whistleblowing Management Systems – Guidance
ISO 37002 Whistleblowing Management Systems. The International Organization for Standardization (ISO) has developed new guidelines for whistleblowing management systems — ISO 37002:2021. ISO 37002 provides guidelines for implementing, managing, evaluating, maintaining and improving a robust and effective whistleblowing management system. But what does it mean in practice, and how can it improve and add value to an organisation’s existing whistleblowing programme?
The ISO Whistleblowing Guidelines assist organisations in creating whistleblowing management systems based on trust, impartiality, and protection principles. The guidelines are adaptable, and their use will vary with the size, nature, complexity, and jurisdiction of the organisation’s activities. The ISO Whistleblowing Guidelines can assist an organisation in improving its existing whistleblowing policy and procedures or in complying with applicable whistleblowing legislation.
ABAC® program assessment and Gap Analysis process involves:
- A comprehensive review to affirm initial buy-in of the organisation’s risk management program beginning with top-level management;
- A survey of the organisation’s staff to determine the overall level of understanding of the established corporate procedures to identify corruption and other risks;
- A review of training programs for personnel;
- An audit of systems and procedures to ensure processes are up to date;
- Staging scenarios to gauge the effectiveness of program implementation;
- An audit of all steps required to identify, report and resolve red flag issues.
Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence is an independent certification body that provides education and certification services for individuals and organisations on a wide range of disciplines and ISO standards, including:
- ISO 31000:2018 Risk Management- Guidelines;
- ISO 37000:2021 Governance of Organisations;
- ISO 37002:2021 Whistleblowing Management System;
- ISO 37301:2021 (formerly ISO 19600) Compliance Management system (CMS);
- Anti-Money Laundering (AML); and
- ISO 37001:2016 Anti-Bribery Management Systems ABMS.
ABAC® offers a complete suite of solutions designed to help organisations mitigate the internal and external risks associated with operating in multi-jurisdiction and multi-cultural environments while assisting in the development of frameworks for strategic compliance programs.
ABAC® is accredited by the United Kingdom Accreditation Service (UKAS CB number: 10613) against ISO/IEC 17021-1:2015 Conformity assessment — Requirements for bodies providing audit and Certification of the scheme’s management systems of ISO 37001:2016 Anti-Bribery Management Systems (ABMS). This makes ABAC® Certification the leading accreditated certification body specialising in global anti-bribery and anti-corruption, risk and compliance management system standards. ABAC® experts audit any existing compliance and anti-bribery anti-corruption management systems to assess effectiveness and vulnerabilities while ensuring your organisation complies with Internal Standards, FCPA, UK Bribery Act, Anti-Money Laundering regulations, and all other global, regional and local regulations while maintaining a competitive edge in the world marketplace.
If you are seeking to validate or expand your existing compliance frameworks to maintain a competitive edge in the world marketplace, ABAC® can help you. Our experts audit your existing compliance and anti-bribery anti-corruption management systems to assess effectiveness and vulnerabilities while ensuring your organisation complies with Internal Standards, FCPA rules, UK Bribery Act laws, Anti-Money Laundering regulations, and all other global, regional and local regulations.
ABAC® Center of Excellence, powered by CRI® Group, educates, equips and supports the world’s leading business organisations with the latest best-in-practice risk assessments, performance assessments, systems improvement and standards Certification.
ABAC® was established as an independent division of CRI® Group to provide training and certification services to businesses seeking to validate or expand their existing compliance frameworks by developing the latest in best-practice anti-corruption, due diligence processes and procedures necessary for pursuing and maintaining global third-party affiliations. ABAC® Center of Excellence offers a complete suite of solutions designed to help organisations mitigate internal and external risks.
Over the past three decades, CRI® Group has emerged as a global leader in corporate investigations and risk management, serving distinguished clients across Europe, Asia Pacific, South Asia, the Middle East, North Africa, North and South America. CRI® Group safeguards businesses by establishing the legal compliance, financial viability, and integrity levels of outside partners, suppliers and customers seeking to affiliate with an organisation.