The SEC is loving the new whistleblower atmosphere that is living large in the aftermath of Bernie Madoff and the financial crisis. Employees with a grudge are loving it, too—to the point that it’s becoming a business in its own right, with the SEC awarding a record $168 million to whistleblowers this year alone.
The SEC awarded more money to whistleblowers in 2018 than in all years combined—getting more tip-offs about misconduct than ever before.
According to the SEC’s 2018 annual report from the “Chief of the Office of the Whistleblower”, “Since the program’s inception, the SEC has ordered wrongdoers in enforcement matters brought with information from meritorious whistleblowers to pay over $1.7 billion in total monetary sanctions, including more than $901 million in disgorgement of ill-gotten gains and interest, of which approximately $452 million has been, or is scheduled to be, returned to harmed investors.”
In terms of awards to whistleblowers, the SEC has paid out over $326 million to 59 individuals since the program’s inception.
This year, not only did it pay out $168 million—more than any other year—but that money went to only 13 people. Two of its biggest awards ever were part of this year’s bounty, which saw three people share $83 million, and two people share nearly $54 million.
“The recipients of these large awards provided significant information regarding serious violations that otherwise may have gone unnoticed and resulted in substantial enforcement actions,” according to the SEC.
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The SEC Office of the Whistleblower received a record number of almost 5,300 tips in 2018—up 20 percent from the previous year and up 75 percent since the first full year of the program in 2012.
The Commodity Futures Trading Commission (CFTC) Offices of the Whistleblower, which also contributed to the annual report had fewer tip-offs, but the trend is still upwardly mobile in a big way.
For 2018, the CFTC saw 760 tips—up 60 percent from the previous year, and it awarded $75 million this year to whistleblowers. It’s biggest-ever award also happened this year, with $30 million paid out for a single narc. It also awarded its first cash to a foreign whistleblower.
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The rise of fraudulent cryptocurrency offerings, of course, helped the spike in tips this year. In fact, the SEC has had so many crypto fraud tip-offs this year that they were forced to create a separate category for them. The CFTC also focused heavily on cryptocurrencies. And both see the trend exploding further, with the CFTC citing crypto and binary options fraud as a future gold mine for whistleblowers.
One of the biggest, open whistleblower cases to watch right now is that surrounding Danske Bank, and whistleblower Howard Wilkinson, who testified before a European Parliament Committee last week, reporting suspicious financial transactions at Danske Bank’s Estonia branch to the tune of up to $20 billion.
Whistleblowers have been property incentivized, to say the least, and those on the anti-corruption side of this divide are banking on 2019 bringing in even bigger awards and bringing down even bigger companies, while the SEC is eyeing this as a key line of defense protecting consumers from fraud.
By Michael Kern for Safehaven.com
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