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New rules mean corporate whistleblowers can get even more money as a reward from the Securities and Exchange Commission, potentially millions more—and get it faster.

While the very biggest rewards could be reduced under the new rules, they can still be staggering. In October, just weeks after adopting the new rules, the SEC awarded an anonymous whistleblower $114 million—by far the biggest award in the whistleblower program’s eight-year existence. Telling the government about corporate malfeasance can still make you rich, and some people think that’s a problem.

The Dodd-Frank law established the program, which can pay whistleblowers 10% to 30% of the amounts the SEC collects from actions it takes based on “original information” supplied by an individual. SEC fines can be huge, and so can the awards. In June, the SEC paid its then-biggest award ever, $50 million, to an individual who reported the overcharging of clients for currency trades at Bank of New York Mellon (the SEC never discloses the names or other details of awardees, but the identity of this one became public). The previous record was a $39 million bounty in 2018; that same year, two people shared a $50 million award. The SEC program can also pay awards “arising out of the related actions of another agency.” The recipient of the recent $114 million award got $52 million from the SEC case and the rest from a separate agency’s case.

Most SEC awards aren’t nearly that big. About 75% of them are $5 million or less, and those are the ones that will be faster and potentially bigger under the new rules. Many whistleblowers and the lawyers who represent them have complained that getting the money can take years. So now the SEC has established a default award at the top of the range: 30% of the amount collected, in cases where the resulting award would be $5 million or less. If there aren’t any “negative Award Factors”—for example, the whistleblower’s participation in the violation being reported—the Commission won’t spend time deciding the amount and will quickly pay out a 30% award. “The determinations have been mired in delay,” says Erika Kelton, a Washington-D.C.-based lawyer who represents whistleblowers. “This could really expedite things.”

But for the big money—if you don’t consider $5 million for an individual tipster big money—the Commission is tightening the rules. Until now, the amount of an award was based on two criteria: the significance of the information provided and the tipster’s continuing cooperation and assistance. Now the Commissioners will also consider the amount of the award itself, meaning they could reduce the amount if it just seems too big. “They’re changing the rules,” says Kelton. “That’s a big black box and a concern for our clients.”

Is paying such giant bounties a good idea? Jane Norberg, chief of the SEC's Office of the Whistleblower, certainly thinks so. "Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors," she says. And big awards may be necessary to incentivize tipsters, who are protected by federal law against retaliation by their employers but nonetheless may lose their jobs or become pariahs in their industry.

Still, “offering financial incentives for whistleblowing has a lot of problems,” says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware and a longtime member of corporate boards. “I believe in whistleblowing. I think it’s effective. But the way they’ve structured it [at the SEC], you discourage the whistleblower from going internally first.”

In the wake of corporate scandals over the past 20 years—Enron, Volkswagen, Wells Fargo—many companies have established compliance programs that encourage employees to report bad behavior to a special compliance office or even directly to the board of directors. Unlike calling the SEC, however, that won’t earn them a dime. Which would you choose? Elson says the SEC program “is really detrimental to compliance programs.”

The irony is that big corporations and the SEC both want to encourage compliance. But in the real world, blowing the whistle is risky, and individuals balancing risk against reward will most likely keep going to the SEC—perhaps now even more so.