SEC slashed offer to Wells Fargo whistleblower by $125M

• Key insight: The SEC slashed the size of the award it offered to a bank whistleblower shortly after President Trump’s choice to lead the agency, Paul Atkins, took office.
• What’s at stake: An attorney for the whistleblower, former Wells Fargo Chief Security Officer Michael Bacon, says the SEC has given shifting rationales for its determinations.
• Expert quote: “Nobody’s arguing about his role. They’re just coming up with creative ways to pay him less and less.” — Vincent McKnight, Bacon’s attorney

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After first offering a nearly $180 million whistleblower payment to an ex-Wells Fargo executive who helped the U.S. government uncover widespread sales misconduct at the bank, the Securities and Exchange Commission has slashed its award determination to around $55 million.

The initial whistleblower award offered to Michael Bacon, the bank’s onetime chief security officer, would have been the second largest in the agency’s history.

Bacon is now appealing the revised $55 million offer, which is still in the top six in SEC history, in federal court. The Financial Times was first to report Thursday on the SEC’s reduced offer to Bacon, who became a star government witness after Wells Fargo’s fake-accounts scandal exploded in 2016.

The SEC initially proposed a $179.5 million award for Bacon in July 2024, and he accepted the agency’s offer, according to court filings.

But the SEC’s order was never finalized, and after President Trump took office in 2025, the agency revised its determination down to $54.5 million. Bacon’s attorney, Vincent McKnight, told American Banker that the SEC has given shifting rationales for its determinations.

“I feel like Charlie Brown — and Lucy and the football,” McKnight said Thursday. “Every time they put the ball down, and we come to kick it, they moved it.”

An SEC spokesperson declined to comment.

Bacon’s case highlights growing concerns among advocates for whistleblower protections regarding the SEC’s direction under the leadership of Commissioner Paul Atkins.

A large part of Bacon’s job at Wells Fargo was to oversee a group of investigators who probed employee misconduct at the bank. In 2022 and 2023, Bacon gave a series of interviews to American Banker that resulted in a five-part series chronicling his whistleblowing efforts.

Before his departure from the bank in 2014, Bacon tried to sound alarm bells internally. And after the fake-accounts scandal became a major news story in 2016, he provided information to various government agencies, including the SEC, the Department of Justice and the Office of the Comptroller of the Currency.

Bacon has laid blame for the fiasco — which involved low-level employees desperate to meet sales targets opening customer accounts without their permission — primarily at the feet of several top former Wells Fargo executives. Those individuals include onetime CEO John Stumpf, who agreed to pay $20 million in penalties, and ex-retail banking chief Carrie Tolstedt, who pleaded guilty to a criminal charge.

Wells Fargo itself ultimately agreed to pay a total of $3 billion to the Justice Department and the SEC. “Michael led them into the C-suite,” McKnight told American Banker in an article published in 2023.

On Thursday, McKnight said the SEC doesn’t dispute that Bacon provided valuable information.

“Nobody’s arguing about his role. They’re just coming up with creative ways to pay him less and less,” McKnight said. “Under the circumstances, their conduct seems arbitrary and capricious.”

‘Am I going to get dinged for delay?’

In an order made public last month, the SEC referred to Bacon as “Claimant 1,” since the whistleblower process is confidential.

The document states that Claimant 1 provided “significant information” early in the SEC’s investigation that “demonstrated the severity” of the violations and showed that “senior management was aware.” It also states that the claimant “provided extensive ongoing assistance throughout the course of the investigation.”

But the SEC also seemed to find fault with Bacon for first reporting his concerns to senior management at the San Francisco-based bank, rather than going directly to the SEC.

“Despite receiving confirmation of the wrongdoing for years, Claimant 1 did not report the conduct to the commission until after leaving the company, and during the period of delay, the conduct continued unabated and investors continued to be harmed,” the SEC’s order states.

McKnight told American Banker that when the whistleblower program was created, there was discussion about its impact on people’s decisions about whether to report problems internally.

“It was important to the SEC that people first go to the employers,” McKnight said, “and give them a chance to rectify.”

McKnight said the question of whether to first report wrongdoing to their employer puts whistleblowers in a bind. “Am I going to get credit for that, or am I going to get dinged for delay?” he said.

The SEC slashed the size of the payment it was offering Bacon in May 2025, two weeks after Atkins was confirmed as SEC commissioner, according to court filings.

In the past, Atkins has been sharply critical of the whistleblower-award program, which offers payments to claimants of between 10% and 30% of the penalties collected through enforcement actions. The goal is to incentivize the uncovering of corporate malfeasance.

Atkins said in 2011 congressional testimony that “the unintended consequences of unfounded charges from disgruntled employees with ulterior motives will be devastating for shareholders.”

He also said: “The injection of plaintiffs’ attorneys into the mix increases the potential for specious claims to get traction and win a settlement, especially if the complainant is anonymous. Congress has skewed the delicate balance between good policy and over-indulgence of accusations.”

‘This is who knew about it, and condoned it’

Bacon, who declined an interview request for this story, has been dealing with the legal fallout from the Wells Fargo saga for nearly a decade.

As the scandal erupted in the fall of 2016, he met in Philadelphia with officials from various government agencies, including the Department of Justice, the FBI, the U.S. Postal Inspection Service and the SEC.

Bacon later told American Banker that he felt he was able to demystify the scandal at an early stage of the government’s probes. He recalled telling the investigators: “This is what happened, this is how far back it goes, this is what continued to happen. And this is who knew about it, and condoned it.”

Five years later, Bacon flew to Sioux Falls, South Dakota, where he was expecting to testify as a government witness at an administrative law hearing. Three former Wells Fargo executives were contesting charges brought by the Office of the Comptroller of the Currency.

Ultimately, the administrative law judge in the case didn’t allow Bacon to take the witness stand. But the same judge relied heavily on evidence involving Bacon in a December 2022 report.

Bacon’s lawyer has argued in court filings that even the SEC’s $179.5 million offer in 2024 was $125 million lower than it should have been, and that a proper analysis would have led to a total award of $304.5 million. The SEC’s largest-ever whistleblower award was $279 million.

Bacon has previously received some compensation for the information he provided to the government.

He was awarded $1.6 million by the Justice Department — the maximum amount payable to whistleblowers under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 — though he ultimately received substantially less money after subtracting attorneys’ fees, taxes and other expenses.

Bacon is not the only individual who has tried to claim a whistleblower award from the SEC in connection with the Wells Fargo unauthorized-accounts scandal. In its order last month, the agency denied the applications of eight other unnamed claimants.