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SEC Whistleblower Lawyer Blog

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During the 2020 fiscal year, the Office of the Whistleblower reported close to 7,000 whistleblower tips. This number represents the largest number of tips received in the program’s ten-year history. Whistleblower claims can be made by ordinary people or those inside the corporate structure who suspect another has or is committing securities fraud. There are a number of factors likely contributing to this influx of whistleblowers, not the least of which was the economic changes experienced by the nation during the COVID-19 crisis. In addition to the pandemic-related financial circumstances that may have created the opportunity for parties to commit fraud, the Security and Exchange Commission (SEC) also added stronger protections for whistleblowers in late 2020. Further, we shouldn’t discount the collective sense of moral obligation in light of the economic and emotional difficulties brought on by the pandemic. Our attorneys have seen a rise in investor disputes and currently represent many investors in securities or FINRA arbitration claims for the sale of unsuitable investments, Ponzi schemes, and broker theft.During the 2020 fiscal year, the Office of the Whistleblower reported close to 7,000 whistleblower tips. This number represents the largest number of tips received in the program’s ten-year history. Whistleblower claims can be made by ordinary people or those inside the corporate structure who suspect another has or is committing securities fraud. Continue reading

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After you and your legal team have filed a whistleblower complaint with the SEC, it may feel anticlimactic. When the SEC receives your tip, the agency reviews it along with thousands of other complaints. Then the SEC decides whether or not to allocate resources for a complete investigation. The investigation and subsequent court or administrative proceedings can additionally take a considerable amount of time. The ordeal is a tedious but significant process, leaving you to ask, “what now?” Even though you’ve done the right thing, you might carry the guilt of how the complaint affected colleagues or entire companies. You could still be learning how to cope with the broken loyalties. Still yet, you may worry scorned colleagues or industry giants hold harmful resentments. These emotions can take a toll, but it’s important to remember that you’ve done a good deed and our financial institutions and public markets are stronger for it.After you and your legal team have filed a whistleblower complaint with the SEC, it may feel anticlimactic. When the SEC receives your tip, the agency reviews it along with thousands of other complaints. Then the SEC decides whether or not to allocate resources for a complete investigation. The investigation and subsequent court or administrative proceedings can additionally take a considerable amount of time. The ordeal is a tedious but significant process, leaving you to ask, “what now?” Continue reading

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“Whistleblowing” is a term used to describe the act of alerting the Securities and Exchange Commission (SEC), in writing, to a securities law violation. For many, whistleblowing is easier in theory than in practice. While most people want to do what is right, and prevent illegal actors from unfair compensation, the fact of the matter is that whistleblowing is often emotionally complicated. While anyone with relevant information may alert the SEC to fraudulent investment activity, tips often come from corporate insiders with intimate knowledge of specific wrongdoing. These whistleblowers face the difficult task of weighing the moral obligation to report the wrongdoing with the consequences their colleagues, or even friends, may face if saddled with a federal investigation into their activities or risk losing their jobs. Whistleblowers frequently struggle with the guilt of betrayal, and wonder if they are doing more harm than good.“Whistleblowing” is a term used to describe the act of alerting the Securities and Exchange Commission (SEC), in writing, to a securities law violation. For many, whistleblowing is easier in theory than in practice. While most people want to do what is right, and prevent illegal actors from unfair compensation, the fact of the matter is that whistleblowing is often emotionally complicated. Continue reading

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Of course, if you become a whistleblower, it’s only natural to consider the impact this may have on you personally—how reporting may affect your career. You may be wondering if you would be subject to retaliation, or perhaps you’re thinking about the upside—the minimum award you could win. In September 2021, the Securities and Exchange Commission (SEC) announced that it had paid out more than $1 billion in rewards to whistleblowers since its new program began. In 2020, one whistleblower received a $114 million payout. But there are other factors to include in your decision to become a whistleblower. Ask yourself how your report might impact your industry, the markets, or even society as a whole? If Not You, Who? No matter what, the SEC will never be able to catch public companies that commit wrongdoing without whistleblowers. They don’t have the resources to look into every company; they need insiders to bring violations to their attention. Studies have shown whistleblowers are ferreting out the vast majority of fraud. PricewaterhouseCoopers concluded that whistleblowers were responsible for 43% of all fraud detection. That’s about ten times the amount revealed by external auditors. In 2017, 92% of the False Claims Act cases brought by the US Department of Justice came from whistleblowers—to the tune of $3.4 billion in settlements and judgments. Of course, if you become a whistleblower, it’s only natural to consider the impact this may have on you personally—how reporting may affect your career. You may be wondering if you would be subject to retaliation, or perhaps you’re thinking about the upside—the minimum award you could win. In September 2021, the Securities and Exchange Commission (SEC) announced that it had paid out more than $1 billion in rewards to whistleblowers since its new program began. In 2020, one whistleblower received a $114 million payout. But there are other factors to include in your decision to become a whistleblower. Ask yourself how your report might impact your industry, the markets, or even society as a whole? Continue reading

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Once you’ve decided to make a report to the Securities and Exchange Commission (SEC), what’s probably the next decision you’ll need to make if you should reveal your identity or give the SEC an anonymous tip. Before you decide, there are some important things you need to know. First, if you decide to be an anonymous tipster and want to be eligible for a whistleblower award, then, under SEC Rule 21F-9, you must have an attorney represents you during the submission of your information. Your attorney will be known to the SEC, and your attorney is responsible for making sure that you have complied with all relevant SEC requirements for your submission. The attorney will have reviewed your materials, your identity, and have you attest to the veracity of your allegations. Your attorney will then be the SEC’s point of contact if it has requests for further information and so forth. Also, while you can be anonymous when you submit the information that leads to an award, the SEC requires that you must reveal your identity prior to receiving an award. So, at some point, you would need to identify yourself to the SEC. However, the SEC will still not identify you publicly, even after they’ve paid you an award.Once you’ve decided to make a report to the Securities and Exchange Commission (SEC), what’s probably the next decision you’ll need to make if you should reveal your identity or give the SEC an anonymous tip. Before you decide, there are some important things you need to know. Continue reading

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Deciding If You Should You Blow The Whistle: Is An Internal Report A Better Choice? For would-be whistleblowers, one of the biggest questions is if they should make an internal report rather than go to the SEC. In fact, 83% of the SEC whistleblowers did raise the subject of their concerns internally, before they went to the SEC. So how do you decide? While there are a lot of factors that will go into your decision, two of the considerations you should address are your goal in making the report and your timing: Is your goal more about punishing the wrongdoers for something that’s already happened, or is it more about preventing the company from committing a violation? And when is an internal or external report the better choice? While there is evidence that sanctioned companies often clean up their act going forward, a report to the SEC is obviously going to be focused on sanctioning the company for wrongdoing they’ve already perpetrated. If you’re making an internal report, you’re giving the company a chance to fix the issue independently.For would-be whistleblowers, one of the biggest questions is if they should make an internal report rather than go to the SEC. In fact, 83% of the SEC whistleblowers did raise the subject of their concerns internally, before they went to the SEC. So how do you decide? While there are a lot of factors that will go into your decision, two of the considerations you should address are your goal in making the report and your timing: Is your goal more about punishing the wrongdoers for something that’s already happened, or is it more about preventing the company from committing a violation? And when is an internal or external report the better choice? Continue reading

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You may be an eligible whistleblower entitled to a reward if you voluntarily provide original information to the Securities and Exchange Commission (SEC) or other federal agency that leads to the SEC’s issuance of sanctions of one million dollars ($1,000,000) or more. But what do those “voluntarily” and “original” requirements mean in practice? Are they significant enough to worry about? Let’s start with that second question first. Yes, meeting these standards is essential: If your information does not meet either the voluntary or the original standards, then you will not be eligible for an SEC award. What’s “Voluntary”? Under Rule 240.21F-4, “voluntary” means that you give your information to the SEC or a similar federal enforcement entity before anyone from the federal government has asked you to turn over that type of information. And importantly, their request does not need to rise to the level of a subpoena or something formal; an informal request is enough. Also, with only a few exceptions, giving the SEC information is not considered voluntary, if you are already required to reveal this information in the context of compliance—i.e., if you’re must provide that information as part of your normal job duties.You may be an eligible whistleblower entitled to a reward if you voluntarily provide original information to the Securities and Exchange Commission (SEC) or other federal agency that leads to the SEC’s issuance of sanctions of one million dollars ($1,000,000) or more. But what do those “voluntarily” and “original” requirements mean in practice? Are they significant enough to worry about? Continue reading

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If you’re deciding to become a whistleblower, there are a number of issues that you should consider. The first of these is to know that just because you provide information to the Securities and Exchange Commission (SEC) about a potential securities violation, that does not mean that you are automatically eligible to receive a whistleblower award. So let’s look at what it takes for you to be considered “an eligible whistleblower” (i.e., someone eligible for an award). You are likely eligible for an award if: You are voluntarily providing original information to the SEC or another federal enforcement agency Your information reveals a potential SEC violation Your information either triggers a new SEC investigation or has a significant impact on an ongoing investigation The SEC issues more than $1 million in sanctions because of the information you uncovered Importantly, two factors that do not affect your eligibility are your citizenship and your employment. You do not have to be a U.S. citizen to be eligible. You can be from anywhere and live anywhere (and the sanction doesn’t have to have taken place on U.S. soil, either). Additionally, you don’t have to be an official or employee of the company to make a report.If you’re deciding to become a whistleblower, there are a number of issues that you should consider. The first of these is to know that just because you provide information to the Securities and Exchange Commission (SEC) about a potential securities violation, that does not mean that you are automatically eligible to receive a whistleblower award. So let’s look at what it takes for you to be considered “an eligible whistleblower” (i.e., someone eligible for an award). Continue reading

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On September 24, 2021, the Securities and Exchange Commission (SEC) announced that it awarded roughly $36 million to a whistleblower who provided information and assistance that “significantly contributed to the success of an SEC enforcement action as well as actions by another federal agency.” The other agency was not named, and limited information was provided in order to protect the identity of the whistleblower. According to the SEC’s press release, the whistleblower gave information on an illegal scheme that was crucial to the government. The whistleblower met with the SEC’s and the other agency’s staff multiple times and identified “key documents and witnesses.” “Today’s whistleblower brought valuable new information to the attention of the SEC and to another federal agency, greatly assisting ongoing investigations…Whistleblowers can act as a springboard for an investigation or, like here, they can propel forward an already existing investigation,” said Emily Pasquinelli of the SEC’s Office of the Whistleblower. As of this writing, the SEC has awarded about $1.1 billion to 214 people since it first issued an award in 2012. Whistleblowers are not paid with money from harmed investors, but from sanctions paid to the SEC by violators of securities laws.On September 24, 2021, the Securities and Exchange Commission (SEC) announced that it awarded roughly $36 million to a whistleblower who provided information and assistance that “significantly contributed to the success of an SEC enforcement action as well as actions by another federal agency.”

The other agency was not named, and limited information was provided in order to protect the identity of the whistleblower. Continue reading

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The SEC continues awarding monies to whistleblowers who assist staff with information that either leads to a successful enforcement action or makes things easier for investigative staff. Two whistleblowers have been awarded a combined bounty of $11.5 million. The first whistleblower received an award of nearly $7 million, and the second received $4.5 million for information and assistance in the case. In the SEC’s order, Secretary Vanessa Countryman stated that: Both claimants had independently and voluntarily provided the SEC with credible and relevant information in regards to the company in question leading to a successful enforcement action The first claimant “persistently” contacted the SEC with information for years before staff finally opened an investigation Claimant 1 was also the primary source of information for the investigation, offering information that would have been nearly impossible for staff to uncover otherwise This included the identification of witnesses and helping SEC staff understand the “complex fact patterns” involved in the case The first individual “made persistent efforts to remedy the issues, while suffering hardships” Claimant 2 also voluntarily offered information that was based on “recent experience” and offered staff a “better understanding” of the issues This whistleblower also offered considerable assistance to staff throughout the investigation and assisted SEC staff evidence requests and settlement negotiations However, Claimant 2 delayed reporting to the SEC for “several years” after learning of the wrongdoing, which led to an appropriate reduction of the award As always, all identifying information regarding the whistleblowers is kept confidential in compliance with the Dodd-Frank Act. The SEC has surpassed the $1B mark in awarding whistleblowers, which is not taken from recovered investor’s monies.The SEC continues awarding monies to whistleblowers who assist staff with information that either leads to a successful enforcement action or makes things easier for investigative staff.

Two whistleblowers have been awarded a combined bounty of $11.5 million. The first whistleblower received an award of nearly $7 million, and the second received $4.5 million for information and assistance in the case. Continue reading

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