One of the signature features of the Dodd-Frank Act was its creation of the SEC whistleblower program, which includes the possibility for whistleblowers to receive generous bounties. The program has grown substantially since its inception. However, there are signs that the program may be undergoing a significant change in direction, as the SEC is “denying a record percentage of whistleblower claims,” according to a July 22, 2025, Bloomberg article, here. According to the article, the recent number of denials suggests that “the agency is enforcing rules and scrutinizing claims more strictly than in past years.”

Pursuant to the Dodd-Frank Act, the SEC initiated its whistleblower program in August 2011. Since that time the number of whistleblower reports to the agency has grown substantially. For example, in the program’s earliest years, the agency received only about 2,000 reports annually. In the most recent completed fiscal year, ended September 30, 2024, the agency received nearly 25,000 reports.

Over the program’s history, the agency has also paid substantial whistleblower awards. Since the program’s inception, the agency has paid out over $2.2 billion in whistleblower bounty awards, to over 440 whistleblowers. This payout total includes the record-breaking $279 million award in 2023.

However, during the current fiscal year, the number and percentage of awards granted, and the total amount of the payouts, has at least so far declined.

According to the Bloomberg article to which I linked above, the agency denied awards in 31 consecutive orders issued between April 21 and July covering at least 55 different whistleblowers. The article says that it is “the longest drought in the history of the program.” The percentage of claims resulting in awards has also declined during this fiscal year. According to the article, during the current fiscal year, the agency has approved about 13% of all claims, compared to about 37% in the prior fiscal year, through the end of July.

The total amount of the awards has also declined compared to the prior fiscal year. The article reports that the total agency has awarded a total of $20 million this year, including three awards totaling $9 million the agency made on July 16, 2025, compared to $60 million awarded at this time last year, on the way to a total of $255 million for the year.

Since these apparent changes cover a relatively short time period, it is difficult to say how to interpret the changes, as well as why the apparent changes are happening. The larger question is whether or not these apparent changes are merely a blip or are a sign that the new administration is trying not to pay whistleblowers.

The Bloomberg article suggests three possible reasons for the apparent changes. The first is the change in administration. The article does not elaborate on this point, but it does note that these apparent changes have happened at a time that the commission now has a Republican majority.

Second, the article also suggests that the final orders this year show a “clear shift from previous commissioners’ practice of waiving or stretching program rules to reward people who published their tips online or shared them with news media before coming to the SEC.” In that regard, the article discusses the award made to Carson Block, of the short-seller firm Muddy Waters Research, after he published a report alleging wrongdoing at a Chinese company. After years of litigation, in May 2025 the commission entered an order saying that allowing tipsters to self-publish, or bring their information to the media before filing with the SEC “would reward behavior inconsistent with the program’s design.”

Third, the article suggests that staffing issues may also explain the apparent changes. The article quotes one source as saying that due to steep staff and budget cuts mean the agency’s staff is not much larger than it was at the program’s inception, yet the agency is now receiving many times more reports each year.

Whatever the reason may be, it seems to be the case that the commission is “scrutinizing the cases more closely.”

Discussion

The whole reason for the availability of whistleblower bounties was to encourage whistleblowers to come forward. If as appears to be the case it is becoming harder for whistleblowers to receive an award, that could diminish the incentives for whistleblowers to come forward. One could imagine that that is not an unintended effect of the apparent increase in the number of claims denials. One commentator quoted in the Bloomberg article asserts that in fact “there has been a policy shift to where resources are now being used to figure out ways to avoid paying qualified claims.”

The fact that the agency apparently is shifting away from making award to whistleblowers who have self-published or gone online with their report before coming to the agency could be a good thing, according to Liz Dunshee in a post commenting on the Bloomberg article on The CorporateCounsel.net blog. Dunshee notes that “it may be good news that there’s more incentive these days for disgruntled folks to go quietly to the regulator instead of also airing their grievances all over the interwebs.” The downside, of course, as Dunshee also notes, is that “the SEC can quietly build a case and choose when to surprise you with news.”

It remains to be seen whether the apparent changes reported in the Bloomberg article will continue over time. But if the changes do hold, it could mean not only fewer awards, but perhaps even fewer reports overall. Were this to happen, it would have a number of important implications, not least as relates to securities suits and other civil litigation following on in the wake of the whistleblower report and investigation. As I have previously noted, there have in fact in the past been securities class action lawsuits filed based on SEC whistleblower’s allegation. A diminution of in the number of whistleblower reports could diminish the possibility for this type of litigation.

Among the possible reasons for the apparent decline in the number of whistleblower awards may be that the SEC whistleblower office is working off a backlog of potentially frivolous reports. As noted in a memo from the Arnold & Porter law firm, while the SEC received nearly 25,000 whistleblower reports in FY 2024, approximately 14,000 were from two individuals. Similarly, in FY 2023, the agency received about 18,300 reports, of which approximately 7,000 were from the same two individuals. That’s about 21,000 reports over two fiscal years from just two individuals.

The likelihood is that many, if not most, of these 21,000 reports from the two individuals are not meritorious, but just working off this mountain of reports has to be straining resources. Whether or not there is an connection between this problem that the agency is facing and the number of claims denials, there is no doubt that this influx of reports from just two individuals has burdened the whistleblower office’s staff.

In any event, it will be interesting to see whether the apparent change in whistleblower awards continues through the rest of the fiscal year. Year-end figures consistent with the interim figures reported in the Bloomberg article would leave little doubt that the agency under the current administration is taking a different, narrower approach to whistleblower awards.