On November 17, 2014, the Securities and Exchange Commission’s Office of the Whistleblower (“OWB”) released its fourth Annual Report on the Dodd-Frank Whistleblower Program to Congress, which details information on OWB’s activities and bounty payouts for the fiscal year, as described in our posts on the 2012 and 2013 Annual Reports.

In its 2014 report, the SEC highlights that since the inception of the whistleblower program in 2011, the Commission has granted awards to a total of fourteen whistleblowers, and nine of these awards were issued in 2014.  The SEC also stressed that the magnitude of the award payments was “record-breaking” in 2014 in that it authorized an award of more than $30 million in September 2014.  In addition, the SEC pointed out that it brought its first enforcement action against an employer for retaliating against a whistleblower under Dodd-Frank’s anti-retaliation provision.


OWB facilitates the Dodd-Frank Whistleblower Bounty Program and coordinates with the SEC’s enforcement branch to investigate whistleblower tips and complaints.  OWB is required to report to Congress annually on the status of the whistleblower program and must provide information on the number of awards granted, the amount of the awards and the type of cases in which the awards were issued in the preceding fiscal year.

Nine Awards Totaling More Than $31 Million in Payouts in FY2014

OWB made nine bounty payouts during Fiscal Year 2014, which is more than the five issued in 2012 and 2013 combined. On September 22, 2014, the Commission authorized a record-breaking award of more than $30 million, which is the largest bounty to be paid out under the Commission’s whistleblower program. This award was issued to a whistleblower in a foreign country, and the SEC pointed out that “allowing foreign nationals to receive awards under the program best effectuates the clear Congressional purpose underlying the award program, which was to further the effective enforcement of the U.S. securities laws by encouraging individuals with knowledge of violations of these U.S. laws to voluntarily provide that information to the Commission.”  The other awards ranged from $150,000 to $875,000, and one award was structured so that the whistleblowers would receive certain percentages of the sanctions recovered by the SEC but did not specify the dollar amounts.  In making one award for $400,000, the SEC explained that, although a self-regulatory organization inquired about the company’s activity before the whistleblower reported to the SEC, the whistleblower’s aggressive internal reporting justified the award and waiver of the “voluntary” requirement.

The SEC also pointed out that “[t]here are commonalities among the tips or complaints that were submitted by these successful whistleblowers.”  The Commission explained that the information provided by award recipients identified specific individuals involved in the fraud or pointed to specific documents that substantiated their allegations.  The Commission also highlighted that these whistleblowers timely reported the alleged misconduct as it was relatively current or ongoing.  According to the Commission, over 40% of the individuals were current or former employees and over 80% of these whistleblowers raised their concerns internally before reporting to the SEC.

The SEC also noted that it denied whistleblower claims in 2014, and the three primary reasons for denial were: (1) the claimant’s information was not “original” because it was not provided to the SEC for the first time after July 21, 2010; (2) the claimant failed to submit his or her application for award within 90 days of the posting of the Notice of Covered Action; and (3) the claimant’s information did not lead to a successful enforcement action because it did not cause the enforcement staff to commence an investigation or significantly contribute to the success of the action.

SEC Supplements Payouts from Previous Years

In addition to its nine new whistleblower awards, OWB paid additional funds to whistleblowers who received awards in previous years due to its collection of additional monetary sanctions since the issuance of the original award.  For example, the Commission supplemented its first whistleblower award of $50,000 from 2012, and announced that the whistleblower would receive an additional $150,000.  The whistleblower’s payout currently exceeds $385,000, which is more than seven times the original payment amount.  The SEC also supplemented its $14 million award issued in September 2013 with a payment exceeding $140,000.  Notably, the $14 million award is the second-largest award issued under the whistleblower program.

Increase in Whistleblower Tips Reported

The number of whistleblower tips received by OWB has increased each year since the program’s implementation, with a 20% increase from 2012 to 2014.  In 2014, OWB received 3,620 whistleblower tips, which is more than the 3,238 in 2013 and the 3,001 in 2012.  The three most frequent types of complaints has remained consistent since the program’s inception, with the most common reports being corporate disclosures and financials (16.9%), offering fraud (16%), or manipulation (15.5%).

OWB received complaints from all fifty states with the highest number of complaints coming from California (556), Florida (264), Texas (208) and New York (204).  In addition, OWB received whistleblower reports from individuals in 60 different countries.  Besides the United States, OWB received the highest number of tips in 2014 from the United Kingdom (70), India (69), Canada (58), China (32) and Australia (29).

SEC Brought its First Enforcement Action under the Anti-Retaliation Provision of Dodd-Frank

Consistent with its report that it was coordinating with enforcement staff to identify instances where whistleblowers were being retaliated against, in June 2014, the SEC brought its first enforcement action under the anti-retaliation provision of Dodd-Frank.  The SEC brought an enforcement action against Paradigm Capital Management claiming that it retaliated against a trader who reported to the SEC that the company had allegedly engaged unlawful transactions. The Commission ordered the company to pay $2.2 million to settle the employee’s retaliation claim.  The Commission notes in the Report that it intended its sanction to send “a strong message to employers that retaliation against whistleblowers in any form is unacceptable.”


The SEC’s whistleblower program gained a lot of momentum this past year. At the end of FY 2013, the SEC’s largest bounty award to date was $14 million, and in 2014, the SEC more than doubled that with a $30 million award.  In addition, the Commission demonstrated that it will supplement whistleblower awards as it continues to recover monetary sanctions relating to those enforcement actions.

Not only did the number of whistleblower tips and the magnitude of whistleblower awards increase significantly, but the SEC expanded the scope of its enforcement actions to include anti-retaliation claims under Dodd-Frank.  Given the $2.2 million settlement that resulted from its first anti-retaliation enforcement action, we can expect that the SEC will continue to pursue enforcement actions in 2015.

In light of the SEC’s continued focus on its whistleblower program and now on the enforcement of Dodd-Frank’s anti-retaliation provision, we can also expect that the number of whistleblower tips, enforcement actions and awards will continue to increase in 2015.  The increase in the magnitude of the SEC’s bounty payouts and its willingness to supplement previous awards will only provide additional incentives for employees to report alleged violations either internally or to the SEC.

The SEC also made it clear that a large percentage of its awards are given to whistleblowers who reported internally and only went to the SEC after the company failed to take remedial action to address the alleged wrongdoing.  Accordingly, it remains essential for employers to ensure that they have mechanisms to receive and timely respond to internal complaints.

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Photo of Lloyd B. Chinn Lloyd B. Chinn

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative…

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd’s practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media, education and technology, he focuses a substantial portion of his practice on the financial services sector. He has tried to final verdict or arbitration award substantial disputes in this area.

Due to Lloyd’s litigation experience, clients regularly turn to him for advice regarding the full range of employment matters, including terminations, whistleblower policy and procedure, reductions in force, employment agreements, and employment policies. For example, in the wake of the financial crisis, he has counseled a number of firms through reductions in force and related bonus and deferred compensation disputes. Lloyd has also been retained to conduct internal investigations of allegations of workplace misconduct, including claims leveled against senior executives.

Lloyd has represented global businesses in matters involving Sarbanes-Oxley and Dodd-Frank whistleblower claims. He has taken an active role in the American Bar Association on these issues, currently serving as Co-Chair of the Whistleblower subcommittee of the ABA Employee Rights and Responsibilities Committee. Lloyd has spoken on whistleblowing topics before a numerous organizations, including the American Bar Association, ALI-ABA, Association of the Bar of the City of New York, and New York University School of Law. He has testified twice before Congressional subcommittees regarding whistleblower legislation and has also published blog postings, articles and client alerts on a variety of topics in this area, including the Dodd-Frank Act’s whistleblower provisions. Lloyd is a co-editor of Proskauer’s Whistleblower Defense Blog, and he has been widely quoted by on whistleblower topics by a number of publications, including the New York Times, the Wall Street Journal, the National Law Journal and Law 360.

Lloyd has also become active in the International Bar Association, presenting on a variety of subjects, including: the #MeToo movement, the COVID-19 pandemic and employment law, and cross-border harmonization of employment provisions in transactions. Lloyd also hosts a quarterly roundtable discussion among financial services industry in-house employment lawyers. He has also published articles and given speeches on a variety of other employment-law topics, including non-solicitation provisions, FINRA arbitration rules, cross-border discovery, e-discovery, and the use of experts.

Photo of Noa Baddish Noa Baddish

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups.

Noa’s practice concentrates on all…

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups.

Noa’s practice concentrates on all aspects of labor and employment law. Her employment litigation practice in state and federal courts includes class and collective actions and defending claims of discrimination, harassment, breach of contract and violations of wage and hour laws. Noa represents Major League Baseball and its clubs in an ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. In addition, Noa has represented clients in the media and entertainment and fashion industries in lawsuits brought by unpaid interns in wage and hour disputes.

Noa also provides significant assistance on counseling matters on a wide array of issues for clients in various industries, including, but not limited to, sports, law firms, financial institutions, media and fashion.

Noa has been recognized as a Rising Star by New York Super Lawyers since 2015. She has authored and contributed to several articles and newsletters on employment and labor topics, including “State Whistleblowing Laws Provide Whopping Verdicts,” New York Law Journal (January 2014). Noa is also a frequent contributor to the Firm’s Whistleblower Defense blog.

Previously served as Assistant General Counsel to the New York City Mayor’s Office of Labor Relations, Noa defended the Mayor and City agencies against both employee grievances at arbitration and improper practice petitions before the Board of Collective Bargaining. Prior to that, she was a Law Clerk to Judge Ellen L. Koblitz of the Appellate Division of the New Jersey Superior Court.

While in law school, Noa served on the Executive Board as notes and articles editor of the Fordham Urban Law Journal.