Jane Norberg Jane Norberg, the SEC’s whistleblower chief. Credit: Diego M. Radzinschi/ALM 

With a more than $10 million award Thursday, the U.S. Securities and Exchange Commission ran up the score in an already record-setting year for the agency’s initiative to reward tipsters, adding to a pile of payouts that has grown against the backdrop of rule changes that have raised alarm among some whistleblower advocates.

The SEC has doled out more than 35 awards this year, including a nearly $50 million bounty in June that was topped last week by a more than $114 million payoutthe highest reward in the history of the agency’s whistleblower program.

Thursday’s award went to a tipster who was credited for providing the SEC with key evidence, along with help deciphering communications, after prompting the agency to open an investigation that resulted in a successful enforcement action.

“After reporting internally and receiving no satisfactory response, the whistleblower alerted the agency to the securities violation and played a critical role during the investigation,” Jane Norberg, chief of the SEC’s whistleblower program, said.

“Today’s award demonstrates the significant contributions that whistleblowers can make to substantially assist investigations and help the commission save time and resources,” Norberg said.

For whistleblower advocates, the SEC’s stated commitment to tipsters has been belied by reforms to the awards program and other moves that could allow the commission to lower bounties.

In late September, the commission adopted reforms to the whistleblower program that included some welcome changes designed to expedite the review process for awards and, as SEC Chairman Jay Clayton put it, deliver more money to whistleblowers more quickly.

In the buildup to those reforms, the SEC determined it had discretion to lower awards based on the perceived appropriateness of the dollar amount paid to whistleblowers. Whistleblower advocates said that discretion injected uncertainty into the program and could dissuade would-be tipsters from risking their careers to come forward and report massive frauds.

Also concerning to those advocates was a provision addressing tips not from corporate insiders but from outside analysts who uncover fraud and other misconduct through sophisticated research.

The SEC said that, for outside analysis to qualify for an award, it must go beyond what would have been reasonably apparent to commission staff based on publicly available information.

Whistleblower advocates viewed the provision as opening up an opportunity for the SEC, with the benefit of hindsight, to diminish the significance of outside analysis and deny awards to worthy whistleblowers.

At a conference on Wednesday, Norberg trumpeted the whistleblower program’s record-setting year, saying the SEC awarded more than $175 million to 39 whistleblowers in the fiscal year that ended Sept. 30.

That total tripled the number of whistleblowers who have been awarded in any past fiscal year of the SEC program, which was borne out of the Dodd-Frank reforms that followed the financial crisis.

“We put in place some efficiencies, took a look at the program and figured out how we could move awards forward quicker,” she said. “I’m very pleased with the amount of awards we were able to get out the door.”

Speaking at the annual Securities Enforcement Forum, held virtually this year because of the coronavirus pandemic, Norberg said the recent rule changes “really should allow the commission to get more money in the hands of more whistleblowers quicker to incentivize them to keep reporting the tips to the commission.”

When asked about the provision affecting independent analysis, Norberg said she does not envision it jeopardizing awards for so-called outside whistleblowers or reducing their incentive to come forward with their findings.

“I think it clarifies what the commission is looking for for original information. What they don’t want is someone to just forward something that is a public document and say, ‘This doesn’t look right. They’re looking for some analysis … showing us something that wouldn’t be evident by looking at the face of the document,” Norberg said.

“I don’t really see much changing in that landscape,” she added.