Climbing the corporate ladder can be a soul-crushing grind. Even after years of successfully navigating office politics, probably compromising your values along the way so that the company can succeed, your reward is only more of the same.
Or perhaps not. Rather than going along with corporate malfeasance, or simply looking the other way when stumbling upon potential wrongdoing at the office, more and more individuals are choosing to blow the whistle.
The Securities and Exchange Commission operates a whistleblower program to help identify fraud and other violations of securities laws. Of course, lots of complicated regulations govern the SEC’s whistleblower program.
The gist, though, is that anyone who voluntarily provides the SEC with original information about a violation of federal securities laws may be handsomely rewarded. The information must result in a successful enforcement action in which at least $1 million in sanctions is ordered. Assuming the necessary criteria are met, the whistleblower is entitled to an award of between 10% and 30% of the money collected.
Given the size of some of the fraudulent schemes being uncovered thanks to the SEC’s whistleblower program, a few of the awardees have become rich indeed. For instance, 2023 saw the largest whistleblower award in the history of the program: a whopping $279 million. Overall, fiscal year 2023 saw nearly $600 million distributed to whistleblowers, a new record for the most ever awarded in a single year.
It is not just the size of awards that has become astronomical. The volume of whistleblower reports also hit a new high for fiscal year 2023, with more than 18,000 tips pouring in. In comparison, there were only 12,300 whistleblower tips received by the SEC in fiscal year 2022 — which was itself the previous annual record. While the annual number of tips received has increased fairly steadily over the entire course of the program, a leap of about 50% in a single year over and above the previous record is truly exceptional.
It is unclear why many more people than in years past are coming forward as potential whistleblowers.
The SEC made its first whistleblower award in 2012, so the program has been available for quite some time. The novel deluge of whistleblower tips could be attributable to an increase in securities fraud, an expanding awareness of the whistleblower program, or a heightened desire among would-be whistleblowers to collect on the increasingly massive awards being handed out. With the average eligible whistleblower walking away more than $5 million richer, there is certainly an adequate incentive to report even in run-of-the-mill cases.
Actually, becoming a millionaire whistleblower is kind of a good modern take on the American dream. The whistleblower program is available to nonemployees with qualifying information, but surely a good proportion of SEC whistleblowers are workers who don’t feel like years of loyalty to their employers has been repaid in kind (whistleblower anonymity is protected, making it difficult to know for sure). It has just got to feel good though to do the right thing legally, stick it to the boss, and get well-paid all at the same time.
Maybe a better career trajectory than the traditional one is to climb the corporate ladder just high enough to see where the fraud is and then get in touch with the SEC. It’s a bit of a long shot — only a tiny fraction of those 18,000 tips received in fiscal year 2023 will lead to whistleblower awards. Still, there are mostly only upsides, as even whistleblowers who do not ultimately qualify for an award receive protections against retaliation.
So, if you’re aware of securities-related misconduct — anything from a public company issuing a material misstatement to a colleague running a Ponzi scheme down the hall — consider getting in touch with the SEC. It just might pay off.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.