Grassley Questions Staffing, Delays in SEC Whistleblower Effort

Sen. Chuck Grassley (R-Iowa) wants the SEC to disclose how much staff is dedicated to its whistleblower program, writing that investigative delays and a recent dip in the number of awards have raised “concerns” about the agency’s signature enforcement effort.

Grassley, who helped to create the whistleblower program in 2010 following the Bernie Madoff scandal, tracked reporting by Bloomberg Law in a letter to SEC Chair Gary Gensler. Bloomberg Law has reported the number of payouts to whistleblowers fell sharply last fiscal year, and agency steadily has reduced the amount of information it releases to the public.

“(C)oncerns have been raised about the SEC’s delay in paying whistleblower awards and a lack of transparency about the resources the SEC has dedicated to review whistleblower tips and award determinations,” Grassley wrote. “Accordingly, given the recent lower than anticipated number of whistleblower awards and the increased number of whistleblower tips, I write today to gather more information with respect to the resources dedicated by the SEC to processing whistleblower tips and claims.”

Grassley gave the Securities and Exchange Commission until April 18 to answer his questions. An agency spokesman on Monday declined to provide a copy of its response or say how many lawyers and other staffers are assigned to sorting, reviewing, and processing the more than 18,000 tips submitted by the public last year.

“Chair Gensler will respond to Members of Congress directly,” a spokesperson said in a written reply to questions. Grassley’s office didn’t immediately respond to requests for comment.

The SEC has received more than 75,000 tips since the program began and has helped to recover more than $6 billion for investors and other victims of securities fraud. It has awarded more than $1.9 billion to tipsters.

But the agency has withheld information about which attorneys have represented the successful whistleblowers or what its criteria are for investigating a tip. A 2022 Bloomberg Law investigation found that more than $420 million was awarded to clients of just three former SEC staff attorneys now in private practice, including one who helped to create the program and another who led it for four years.

In his letter to Gensler, Grassley noted the agency’s lack of transparency and consistency extended to its congressional budget requests.

“The SEC’s FY 2025 and FY 2024 Congressional Budget Justifications do not provide sufficient details with respect to how the joint resources of ENF (its enforcement division) and (Office of General Counsel) are used to staff the SEC whistleblower office,” Grassley wrote.

“For example, in the SEC’s FY 2025 budget request, OGC requested additional positions to staff the whistleblower office, but ENF did not. Yet in the SEC’s FY 2024 budget request, ENF requested additional resources for the whistleblower office, but OGC did not.”

Grassley asked Gensler to provide information on more than a dozen metrics, including the number of “positions assigned to review whistleblower tips and process awards.” He also asked for the number of tips received, the number of tips that were not assigned to investigators, and the total number of whistleblower complaints reviewed or pending review.