Two recent events may spur a rise in the number of high quality whistleblower tips filed with the SEC. First, on August 30, 2016, the SEC announced that it had awarded a $22.4 million bounty to a former Monsanto financial executive, whose report of alleged accounting fraud led to the company’s $80 million settlement with the SEC in February. This recent award brings the total amount paid out to whistleblowers by the SEC since the inception of the bounty program in 2011 up to $107 million, more than half of which has been paid out in 2016 alone. This most recent award follows a string of seven and eight-figure awards in 2016, most notably topping a $17 million bounty in June 2016, and is second in size only to a September 2014 award of $30 million. The $22.4 million award represents approximately 28% of Monsanto’s $80 million payment, just shy of the 30% award cap established for recoveries exceeding $1 million.
Second, on September 6, 2016, Sean X. McKessy, former Chief of the SEC’s Office of the Whistleblower, announced that he joined Phillips & Cohen LLP, a plaintiff’s firm that specializes in SEC whistleblower cases and represented the foreign whistleblower who received the highest-ever $30 million award from the SEC. Mckessy said in an interview with The New York Times, “I feel I’ve established that I honor the work whistle-blowers do … I am hoping to convince many people who are on the fence witnessing fraud to come forward.”
McKessy helped establish the SEC’s Office of the Whistleblower in 2011 and served as its Chief until he stepped down in July 2016. According to the Commission, under McKessy’s watch, the Office received nearly 4,000 tips in 2015 alone (a 30% increase over the number of tips received in Fiscal Year 2012), recovered more than $500 million in financial remedies from tips, and paid out more than $85 million in bounty awards, not including the most recent $22 million award. McKessy’s move to Phillips & Cohen certainly strengthens the ranks of the plaintiff’s whistleblower bar in this complex area.
Our prediction is that these recent developments will aid in the momentum of the SEC’s whistleblower program and serve as harbingers of high stakes whistleblower claims to come.