In a June 4, 2020 press release (here), the SEC announced that it had granted an individual a $50 million whistleblower award, the largest ever award to a single individual. While there had been a prior $50 million award that two individuals shared, the largest prior award to a single individual was a 2018 award of $39 million.


Under the SEC Whistleblower Program established in the Dodd-Frank Act, individuals who provide the agency with original leads about illegal conduct, or give the agency information that significantly advances an open investigation, may receive a bounty of between 10% and 30% of the total fines collected.


The SEC’s June 4, 2020 order making the recent $50 million award (actually, “nearly $50 million” award) is heavily redacted so it is not possible from the order to find out the name of the individual receiving the award or even what the individual’s report was about or how it helped the agency.


However, a June 5, 2020 Wall Street Journal article about the award (here) provides a significant amount of information about the award, including the name of the individual receiving the award and the nature of the whistleblower report he provided.


According to the Journal, the individual receiving the award is Grant Wilson, a former currency trader at the Bank of New York Mellon. Wilson apparently alerted authorities, including the SEC, of the bank’s pattern of overcharging big clients on currency trades. The Journal article reports that Wilson provided extensive documentation, including descriptions of how the bank processed trades that resulted in client overcharges. The SEC’s June 4 order says that the whistleblower’s assistance involved “firsthand observations of misconduct” and details that “provided a road map for the investigation.”


The bank ultimately paid fines totaling $714 million, including $163 million in fines to the SEC. (The $50 award in connection with $163 million in SEC fines means that Wilson received an award at the upper end of the permissible range.)


According to the SEC’s press release about the recent record award, the SEC has awarded over $500 million to 83 individuals since issuing its first award in 2012.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.  No money is taken or withheld from harmed investors to pay whistleblower awards. The SEC’s statistics on the whistleblower program can be found here.


The SEC’s press release also contains a statement by the head of the SEC’s Office of the Whistleblower that “Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.”


According to recent press reports (for example here), in the midst of the coronavirus outbreak, whistleblower reports and other tips have become a particularly important part of the SEC’s arsenal as it tries to combat financial misconduct during the pandemic. According to the reports, during the period between Mid-March and Mid-May of this year, the number of complaints to the agency increased by over 35%. The likelihood is there could be a significant jump in the level of enforcement activity based on whistleblower reports in the wake of the pandemic. The SEC’s recent record individual award will likely further hearten would-be whistleblower and encourage even further whistleblower reports.