SEC Whistleblower Program

Whistleblowers provide a vital service to the United States when they report evidence of fraud, waste, abuse, mismanagement, or other illegal activity involving a federal agency. As a result, many federal agencies have passed whistleblower protection laws, including the Security and Exchange Commission (SEC).

Do you believe your employer or other organization engaged in fraud or other illegal activity involving the SEC? Then, contact our SEC whistleblower and False Claims Act (FCA) attorneys at Nix Patterson today for a free whistleblower case review.

What Is the SEC Whistleblower Program?

The SEC reports that assistance and information from whistleblowers who are aware of potential violations of securities laws are some of the most potent weapons the agency has to fight corruption and fraud. Whistleblowers often help the SEC pinpoint potential fraud and related violations earlier than would have been otherwise possible. This allows the SEC to reduce financial harm to investors and better preserve the quality and integrity of the country’s capital markets.

U.S. Congress authorizes the SEC to provide monetary awards to whistleblowers who produce high-quality, original information that results in an SEC enforcement action when more than $1 million in sanctions is ordered. The range for a whistleblower award is between 10% and 30% of the funds collected.

The agency performs investigations into potential securities violations, and the more specific and timely the information, the more likely the information will be forwarded to the appropriate staff. For example, if a whistleblower identifies people involved in an illegal scheme or offers examples of possible illicit transactions, the information is more likely to be forwarded to the Enforcement staff.

However, the SEC lacks jurisdiction to take enforcement actions on information not in the agency’s scope. The agency may, if appropriate, forward the matter to another agency for follow-up. Some of the illegal activities that whistleblowers sometimes report to the SEC are:

  • Insider trading
  • Ponzi schemes
  • Security price manipulation
  • Abusive short selling
  • Bribery of foreign officials
  • False and misleading statements about a business or company
  • Initial coin offerings

Can You Report Anonymously?

Yes, you can submit tips anonymously. However, to be eligible for an award, you need to have an SEC whistleblower attorney representing you in the case. Your attorney must provide the information on behalf through the agency’s online TCR portal or provide a hard copy of Form TCR. You must also give the attorney a completed Form TCR that you signed under penalty of perjury.

The SEC is committed to protecting whistleblowers’ identities as much as possible. For instance, the SEC will not disclose your identity if requests are made via the Freedom of Information Act. However, the SEC states there are limits to its ability to protect your identity in some instances and the information may have to be disclosed to certain people or entities.

For instance, in a court or administrative proceeding, the SEC may have to produce documents or related information revealing who you are as a whistleblower. Also, as part of the SEC’s investigatory work, the agency may use your provided information.

Examples of Eligibility for the SEC Whistleblower Program

To qualify for an SEC whistleblower award, you must provide information voluntarily to the agency that helps it to file an enforcement action that leads to sanctions over $1 million Some of the most critical requirements to qualify for the SEC Whistleblower Program are:

  • The information has to be related to an SEC securities law violation or the bribing of a foreign official.
  • The information must be provided voluntarily before the government asks for the information.
  • The information must be your independent knowledge or analysis and unavailable in public sources.
  • You could qualify for a whistleblower award if you report the matter to your company and then it self-reports it to the SEC.
  • The SEC could raise your award if you report your information via internal channels. But it can reduce the reward if you interfere with your company’s investigation.

Also, the following persons do not qualify for an SEC whistleblower award:

  • Lawyers who obtain the information related to their representing the company, or if the information is subject to attorney-client privilege.
  • Company directors or officers who discover violations related to internal compliance processes.
  • Public accountants who work on SEC-related engagements
  • Company workers who obtained the information related to their work in audits or compliance.

What Is ‘Original’ Information?

Original information is derived from your independent knowledge or independent analysis not currently known by the SEC. Also, a whistleblower who offers independent analysis must do more than simply point out publicly available information. Information isn’t independent analysis if you simply direct the SEC to already public information.

Contact the SEC Whistleblower and FCA Attorneys at Nix Patterson Today

If you suspect or know that your employer is attempting fraud or other illegal activity involving the SEC, contact our SEC whistleblower and FCA attorneys at Nix Patterson. Our attorneys can assist with whistleblower cases involving the SEC and other federal agencies.

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