Earlier this month, the Securities and Exchange Commission announced yet another large whistleblower bounty. See SEC Awards Nearly $1 Million to Whistleblower. This brings to $136 million the total amount awarded to date by the SEC to whistleblowers. That is a lot of money, especially since it went to only 37 individuals!
Were any of those awards made to individuals with close ties to the SEC? We can’t know. The reason is that the SEC reveals almost no information about the whistleblower or the underlying action. I don’t fault the SEC for this because Section 21F(h)(2) of the Securities Exchange Act requires, with certain exceptions, that the SEC not disclose information that could reasonably be expected to reveal the identity of the whistleblower.
“Let not moss-covered error moor thee at its side”
I do think that Congress erred in mandating confidentiality, especially in light of the prohibitions on retaliating against whistleblowers. I am not alleging that the SEC has acted improperly in making awards. However, without transparency, the public is forced to accept it on faith that the SEC has not, and will not, play favorites when awarding millions of dollars to a small handful of individuals.