On November 15, 2019, the SEC published its annual report to Congress covering the agency’s whistleblower program.

The report, which covers the period of October 1, 2018 through September 30, 2019, was prepared by the SEC’s Office of the Whistleblower (“OWB”) to summarize its whistleblower bounty program, report on recent statistical trends, and revisit key amendments to the SEC’s Dodd-Frank regulations that were first introduced in June 2018.

Whistleblower Bounty Program

The statistics provided in the SEC’s report suggest that the whistleblower program slightly contracted in FY 2019, compared to the previous year.  OWB received a total of 5,212 whistleblower tips in FY 2019, 70 fewer than were received in the record-setting FY 2018.  This total still represents an approximately 74% increase in tips received since the SEC started tracking statistics for the whistleblower bounty initiative in 2012.

The SEC reports that in FY 2019 approximately $60 million was distributed to 8 individuals whose initial tips and subsequent cooperation aided in the execution of successful enforcement actions.  The SEC’s March 2019 $50 million award to two whistleblowers included a $37 million bounty to one of the individuals – the SEC’s third largest single award since the program’s inception.

For FY 2019, the SEC reports that the most common activities reported by whistleblowers related to corporate disclosures and financials (21%), offering fraud (13%) and manipulation (10%).

Proposed Rule Amendments

The SEC proposed amendments to its regulations to cope with the volume of tips it receives on an annual basis.  Specifically, these amendments (the full text of which can be found here) seek to bar whistleblowers who repeatedly make frivolous claims and afford OWB additional discretion in making bounty determinations.  Moving into FY 2020, the SEC will continue to consider the public comments received on these proposed amendments, which were originally introduced in June 2018.  The SEC expects to adopt these proposed rules sometime in the coming year.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.