A recent article in the Roanoke Times details the explosive growth in whistle-blowing lawsuits during the pandemic, especially for financial fraud. In the fiscal year that ended September 30, the U.S. Securities and Exchange Commission received 6,900 tips alleging while collar crime, 31% jump from the previous 12-month record.
Whistleblowing can be quite lucrative. Since the COVID pandemic begin, the S.E.C. alone paid out roughly $330 million in awards, including $114 million to a single whistleblower in October.
The S.E.C. gained authority to pay whistleblowers under the 2010 Dodd-Frank Act. Under the program, whistleblowers can receive financial rewards if they voluntarily provide unique information that results in an enforcement action. Payouts can range from 10% to 30% of the money collected in cases where sanctions exceed $1 million.
Whistleblowing tips seem to have accelerated during the pandemic, as the isolation from working from home emboldens employees to speak out and provides greater autonomy to report unethical and illegal conduct.