SEC Announces Largest Whistleblower Awards Ever Granted Under the Dodd-Frank Act’s Bounty Provision

On March 19, 2018, the SEC announced its largest-ever whistleblower awards, with two individuals jointly sharing a nearly $50 million award and a third individual receiving more than $33 million. These awards represent approximately one-third of the $262 million in whistleblower bounties that the SEC has granted under the Dodd-Frank Act. The previous high-water mark was an award of $30 million in 2014.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that may reveal their identity. A law firm representing the whistleblowers, Labaton Sucharow, said that the awardees were three Merrill Lynch executives who provided information to the SEC in connection with the misuse of customer funds by Merrill Lynch. That information helped the SEC secure a $415 million settlement with Bank of America Corp., the second-largest against a Wall Street bank, in 2016.

The SEC’s announcement comes just weeks after the Supreme Court held in Digital Realty Trust, Inc. v. Somers (Feb. 21, 2018) that the Dodd-Frank Act’s anti-retaliation provision provides a private cause of action only for persons who report suspected wrongdoing directly to the SEC, and not for persons who report exclusively to their employers internally. You can read our memorandum on the Digital Realty Trust decision.