SEC Awards Largest Bounty Ever and More Expected to Come Out of the COVID-19 Pandemic

As we reported last month, the Securities & Exchange Commission (SEC) has continued to award numerous multi-million-dollar bounties under its Dodd-Frank whistleblower program notwithstanding the current COVID-19 crisis.

Now, the SEC has announced it recently awarded $50 million to an individual, its largest whistleblower award ever. As part of its order announcing the award, the SEC noted that the whistleblower was an individual who provided firsthand observations of misconduct by a company that returned a significant amount of money to harmed investors. Specifically, the individual laid out substantial aspects of the company’s scheme and provided a detailed roadmap for the investigation.

Since its inception, the SEC has awarded over $500 million to 83 individuals under its whistleblower program, and employers should expect this trend to continue. From mid-March to mid-May, the SEC received more than 4,000 tips, complaints, and referrals (TCRs), which represented a 35% increase over the same period last year. Much of this uptick in TCR activity is either directly related to the COVID-19 crisis or indirectly related to the emerging turbulence in the markets. The SEC has promised to “move swiftly against those who seek to profit off this national emergency by cheating or misleading investors.” For instance, the SEC charged Applied BioSciences Corp. with securities fraud based on the company’s public statements about products supposedly meant to curb the spread of the COVID-19 virus. Likewise, the director of the SEC’s New York regional office has stated that COVID-19 related cases are a priority for the agency and has suggested that the SEC may bring enforcement actions immediately rather than relying on tolling agreements.  Stay tuned as we will continue to monitor and blog on SEC whistleblower developments.