Who Watches Corporations When the SEC Stands Down?

In fiscal year 2023, the Securities and Exchange Commission awarded $600 million to whistleblowers. In fiscal year 2024, $255 million. In the first three months of fiscal year 2026, the agency has awarded nothing.

The SEC's whistleblower program was created under the Dodd-Frank Act after the 2008 financial crisis. The premise was straightforward: the people closest to corporate fraud are the most likely to see it, and they need a financial incentive to come forward because the personal cost of reporting — retaliation, termination, legal fees, career damage — is severe. The program offered whistleblowers 10 to 30 percent of any sanctions exceeding $1 million that resulted from their tips.

Since 2012, it has paid more than $2.2 billion to 444 individual whistleblowers. Those tips led regulators to return $1.5 billion in ill-gotten gains to investors. The program received roughly 25,000 tips a year from insiders who saw something wrong and believed someone would act on it.

In fiscal year 2025, awards collapsed to $59.7 million — a 77 percent decline from the prior year and the lowest level since 2017. Between April and July of 2025, the SEC denied whistleblower awards in 31 consecutive orders, covering at least 55 individual claimants.

The tips kept coming. The whistleblower office received approximately 27,000 tips in fiscal year 2025, an 8 percent increase over the prior year. People are still reporting. The agency has stopped paying them for it.

SEC Chair Paul Atkins, nominated by President Trump and sworn in on April 21, 2025, has held a consistent position on the program for over a decade. In 2011 testimony before Congress, delivered while he was a visiting scholar at the American Enterprise Institute, Atkins argued that the whistleblower program presents "perverse incentives" and warned that "the unintended consequences of unfounded charges from disgruntled employees with ulterior motives will be devastating for shareholders." He said the bounties were "so large" that whistleblowers were incentivized to report directly to the SEC rather than through their companies' internal compliance programs.

He now controls the program he argued against.

Under Atkins, the SEC's enforcement cases have fallen to a record low — 30 percent fewer enforcement actions against corporations than the agency brought in 2024. The agency has experienced a 17 percent reduction in headcount. It has dropped or paused nearly 60 percent of crypto-related cases and has brought no new crypto enforcement actions since the change in administration.

This is not a question of shifting priorities between administrations. The scale and speed of the decline — across enforcement actions, whistleblower awards, and staffing — describe an agency in retreat.

The SEC's own financial report, released in January 2026, makes the gap between capacity and action explicit.

The agency disclosed that the range of probable contingent liabilities for fiscal year 2025 whistleblower awards sits between $218 million and $655 million — its own estimate of what it likely owes to whistleblowers whose tips have already led to successful enforcement actions. It awarded $59.7 million.

The SEC also reported making 82 preliminary determinations recommending awards, meaning its own staff evaluated these claims and found them meritorious. The awards have not been issued.

The Investor Protection Fund, from which whistleblower awards are paid, finished fiscal year 2025 with nearly $319 million. The money is there. The cases are there. The staff recommendations are there. The awards are not.

There is bipartisan recognition that the program is in trouble.

In March 2025, Senator Chuck Grassley and Senator Elizabeth Warren reintroduced the SEC Whistleblower Reform Act of 2025, co-sponsored by Senators Collins, Warnock, and Cortez Masto. The bill would protect whistleblowers who report violations to a direct supervisor from retaliation, ensure timely processing of claims, and clarify that whistleblower rights cannot be waived through pre-dispute arbitration agreements.

"Patriotic whistleblowers root out waste, fraud and abuse taking place in the shadows," Grassley said. "I'm proud to reintroduce this legislation to increase government accountability by safeguarding the SEC's Whistleblower Program."

The bill has not passed.

The consequences for corporate accountability are mechanical, not theoretical.

The whistleblower program functions as an early warning system. The SEC cannot monitor every public company's internal accounting practices from the outside. It depends on insiders — the engineers who log timesheets that determine whether labor costs are capitalized or expensed, the analysts who see that internal metrics don't withstand scrutiny, the accountants who watch cost structures get reclassified in ways that obscure economic reality from investors.

When the SEC stops paying awards, the incentive structure that surfaces those insiders breaks. The cost of reporting stays the same. The expected return approaches zero. A rational person — even one with clear evidence of accounting manipulation — looks at an agency that has denied 31 consecutive claims, awarded nothing in three months, cut 17 percent of its staff, and is led by a chair who described whistleblowers as having "ulterior motives," and makes a reasonable calculation: it is not worth it.

The companies do this math too. When enforcement drops 30 percent and the whistleblower pipeline slows, the probability of detection for aggressive accounting practices decreases. The expected penalty shrinks. For a finance team weighing whether to capitalize aggressively, defer expense recognition, or rely on questionable metrics to justify asset valuations, the regulatory environment has never been more permissive.

The market implications of a dormant enforcement regime are specific, predictable, and already in motion.

When companies know that the probability of SEC scrutiny has dropped by 30 percent, the cost-benefit analysis of aggressive accounting tilts. When employees know that the whistleblower program has paid nothing in three months, the flow of tips slows. When auditors know that the regulatory backstop has weakened, the pressure to push back on management's accounting judgments decreases. Each of these effects reinforces the others.

The result is a market in which the distance between reported financials and economic reality can grow wider without correction because the mechanisms designed to detect and deter it have been deliberately weakened.

The SEC's stated mission is "maintaining fair, orderly, and efficient markets." Fair markets require that investors can trust the financial statements companies publish. Efficient markets require that material information reaches the public. Both depend on a functioning enforcement apparatus and a whistleblower program that gives insiders a reason to report what they see.

Investors are making decisions based on financial statements that, increasingly, no one with the authority to act is checking. The last line of defense was the person inside the company who could see the discrepancy and had a reason to report it.

That reason has been taken away.

If you are a current or former employee of a public company with information relevant to accounting practices, labor capitalization, or financial reporting, you can reach out on Signal. Source confidentiality will be protected.

The McClure Standard is an independent investigative publication. Claims are verified through sources, public filings, and documentary evidence before publication.