SEC Whistleblower Lawyer Blog
The SEC (US Securities and Exchange Commission) has exacting criteria for both submission of whistleblower tips and their issuance of any financial bounties, including the amounts.
How SEC Whistleblower Awards Are Determined
The general rule for the award amount is 10% to 30% of all monetary fines collected from the entities in question based on a judgment in excess of $1 million. The money is not taken from investor funds. The fines and other civil penalties imposed on and collected from those involved in misconduct goes into the fund that pays the SEC’s whistleblower awards.
Occasionally other federal agencies separately offer their own awards in addition to the SEC’s bounties. They are awarded and calculated separately from the SEC’s.
The awards are not made automatically, and the whistleblower must submit a claim them once the case is published on the SEC’s website.
Criteria For Deciding An Award
Whistleblowers must not only be eligible for an award but comply with the SEC’s criteria for submissions, which are used to determine the amount of an award. This includes:
- The significance of the information provided
- How much assistance the individual provided to the SEC’s staff during the investigation, and any hardships encountered in the process
- The timeliness of the submission
- The information’s relevance: how much the information supported the claims that the SEC ultimately brought in a covered action, a related action, and how the information helped SEC staff save time and resources during the investigation
- Any interest by law enforcement
- Whether the individual participated in any internal compliance systems, such as reporting their concerns about potential misconduct to the company’s own compliance officer or department, and assisted in an internal investigation
The SEC also considers other factors that might decrease an award or disqualify someone from receiving an award, such as:
- The whistleblowers education, experience, and position of responsibility at the time of the misconduct
- Delays in reporting the misconduct, and failing to take steps to report it or prevent the misconduct from continuing
- Interfered with internal compliance systems, such as auditing or other procedures to stall or prevent reporting of the misconduct
- Their involvement in the misconduct, and if they acted with scienter (that is, knowing it was wrong and doing it anyway)
- If they financially benefitted from the actions
- If they were a repeat offender
- Unreasonably delayed reporting without a formidable reason
While the SEC uses these criteria to determine if a person is eligible, they can also suspend the criteria in extenuating circumstances.
Anonymous Reporting and Confidentiality
An individual can remain anonymous when submitting information to the SEC. However, they must be represented by legal counsel to remain anonymous to the agency.
Throughout the process, the SEC keeps confidential the name of the whistleblower and any identifying details of the covered action from the public. This is not the same as remaining anonymous to the SEC.
To receive an award, the whistleblower must identify themselves to the SEC through their legal counsel before the award is made. They will not be publicly identified, but their identity must be verified prior to an award being made.
Retaining Experienced SEC Whistleblower Attorneys
Whistleblowers help everyone by notifying the SEC of conduct that harms the investing public, while also earning financial compensation for themselves. Hiring experienced SEC counsel may greatly increase the probability that the SEC will initiate an investigation based on your information. If you wish to remain anonymous, you must be represented by an attorney, who will submit everything on your behalf.
Silver Law Group and the Law Firm of David R. Chase jointly have experienced SEC whistleblower lawyers, including a former SEC Enforcement attorney on the team, so you will always have guidance throughout the process. Our SEC whistleblower attorneys can help you if you have information regarding securities or investment fraud, violations of federal securities laws, false filings, market manipulation, or other misconduct. You must provide timely, credible, and original information or analysis to be eligible.
Contact us through our online form or at (800) 975-4345 for a consultation. Our attorneys work on a contingency fee basis. This means that it costs you nothing to hire us, and we collect our fees only if you receive an SEC bounty. Because we get paid when you do, we have the incentive to help you collect the maximum award available.