On November 15, 2021, the SEC published its annual report to Congress covering the period from October 1, 2020 to September 30, 2021.  The report was prepared by the SEC’s Office of the Whistleblower to summarize its whistleblower bounty program, report on the program’s recent dramatic growth, and highlight key amendments to the SEC’s whistleblower program rules.

Record-Breaking Awards for Whistleblower Bounty Program

The report reveals that in FY 2021, the whistleblower program experienced the largest number of submissions to the program and the largest number of award recipients.  The SEC paid out more in whistleblower awards this fiscal year than in all previous years combined.

The SEC received more than 12,200 whistleblower tips; an increase of 76% from FY 2020.  The tips were received from 99 different countries and all 50 states.  The most common violations reported included: Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).

Overall, the SEC awarded approximately $564 million to 108 individuals in FY 2021, including the two largest single award payouts to date—$114 million in October 2020 and $110 million in September 2021—which brought the total amount the SEC has awarded to whistleblowers since the program’s inception to $1.1 billion.  

Amendments to Whistleblower Program Rules

The SEC adopted several changes to its whistleblower program effective as of December 2020, including to its award-setting procedures and to the definition of a “whistleblower” (see our post on those changes here).  According to the report, these amendments “increased efficiencies around the review and processing of whistleblower award claims.”

Under the new rules, the SEC issued two permanent bar orders against serial submitters who were responsible for hundreds of frivolous award applications.

The report also noted that in August 2020, the new SEC Chair, Gary Gensler, directed staff to consider revisions to two amendments that could have discouraged tips by allowing the SEC to limit the size of some of the largest awards and to unilaterally deny “related action” awards where there is another applicable whistleblower award program.

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Photo of Steven J. Pearlman Steven J. Pearlman

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

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

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

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. 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.

Thought Leadership and Accolades. Steven was named 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 has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

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 U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often 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.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

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