Money & Finance › Fraud, scams & enforcement › Fraud enforcers: DOJ, FBI and the FTC
Whistleblower award programs (SEC, IRS, CFTC)
SEC program since 2011· Law or rule
Fact, law or dataA rule, statute, definition or measured number.
US agencies pay insiders 10% to 30% of the penalties collected when their tips lead to successful fraud or tax cases.
See it on the Money & Finance map →How it works
The SEC and CFTC programs, created by Dodd–Frank in 2010, pay 10–30% of sanctions over $1 million. The IRS program, made mandatory in 2006, pays 15–30% of collected tax when over $2 million is at stake. SEC tipsters can stay anonymous through a lawyer, and firing someone for reporting is illegal. The SEC alone had paid more than $2.2 billion to over 400 people by 2024; its largest award was $279 million in 2023. A FinCEN money-laundering program was authorized in 2021.
Why it matters
Insiders spot fraud long before auditors or regulators. Paying them turns a lonely, career-ending choice into a rewarded one, and tips now drive many of the SEC's largest cases.
Facts, rules and data
Annual reports to Congress from the SEC, CFTC and IRS whistleblower offices list award counts and totals. Bradley Birkenfeld's $104 million IRS award in 2012 is the best-known single case.
Debates and risks
Critics say big awards can reward people who took part in the fraud, as Birkenfeld did; others say payments are too slow, often taking years.
Connections (3)
▸Dodd–Frank Act (2010) created the SEC and CFTC versions of Whistleblower award programs (SEC, IRS, CFTC)Fact, law or data
The connection
Madoff's case showed that tips reaching the SEC could go unheeded, and Congress wanted to give insiders more reason to come forward. Section 922 of Dodd–Frank created an SEC award fund paying 10–30% of sanctions over $1 million, financed by penalties rather than taxpayers, plus job protections. Section 748 did the same for the CFTC.
When and why
Washington, July 2010, signed by President Obama; the SEC's Office of the Whistleblower opened in 2011 and paid its first award in 2012.
How we know
The text of Sections 748 and 922, and the agencies' annual reports to Congress on whistleblower awards.
Debates and risks
The Supreme Court's 2018 Digital Realty ruling limited Dodd–Frank job protection to people who report to the SEC, leaving out those who report only inside the company; debate over that gap continues.
▸Internal Revenue Service (IRS) pays awards under Whistleblower award programs (SEC, IRS, CFTC)Fact, law or data
The connection
The IRS has paid informants since 1867, but small, discretionary rewards drew few strong tips. A 2006 law created a Whistleblower Office and required awards of 15–30% of collected tax, penalties and interest in cases over $2 million. That made big tips worth the career risk, notably on offshore accounts.
When and why
Tax Relief and Health Care Act of 2006; the office opened in 2007 and paid Bradley Birkenfeld $104 million in 2012.
How we know
Internal Revenue Code Section 7623 and the Whistleblower Office's annual reports to Congress listing awards and collections.
Debates and risks
Claims often take many years to pay, and tipsters say delays discourage reports; how well the office is run is a recurring complaint.
▸Offshore tax evasion and FATCA/FBAR foreign-account reporting was blown open at UBS through Whistleblower award programs (SEC, IRS, CFTC)Fact, law or data
The connection
UBS banker Bradley Birkenfeld told US authorities in 2007 how the bank helped Americans hide money in Switzerland. His evidence forced UBS to pay $780 million and hand over thousands of client names, breaking Swiss secrecy. The IRS later paid him $104 million, encouraging more tips.
When and why
Geneva and Washington, 2007–2012; UBS settled in February 2009; Birkenfeld served about 30 months in prison for his own role.
How we know
The DOJ's UBS deferred prosecution agreement, Birkenfeld's IRS award, and Senate investigation reports.
Debates and risks
Prosecutors said he first hid his own biggest client's role; whether rewarding him was right is still argued.