Overview of the SEC Whistleblower Program
In 2010, Congress passed The Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended the Securities Exchange Act of 1934 by creating a Whistleblower Program to provide monetary incentives for individuals to come forward and report possible violations of the federal securities laws to the SEC. In addition to providing monetary incentives for individuals, the Program also prohibits retaliation by employers against employees who provide the SEC with information about possible securities violations.
The SEC Whistleblower Program is an important tool to reward individuals who provide the SEC with high-quality tips that lead to successful enforcement action. As reported in its September 2020 Guidance from The Office of the Whistleblower, the amount and frequency of whistleblower awards are on the rise since the Program’s creation in 2011. Under the Program, whistleblowers have received awards totaling approximately $523 million, and, from fiscal year 2012, the annual number of whistleblower tips received by the Commission has grown by approximately 74 percent.
What are the Awards for Reporting Possible Violations to the SEC Whistleblower Program?
Under the SEC Whistleblower Program, eligible whistleblowers are entitled to an award of between 10% and 30% of the monetary sanctions collected in actions brought by the SEC and related actions brought by certain other regulatory and law enforcement authorities. The range of the award paid to the whistleblowers (between 10%-30% of the sanctions) is at the complete discretion of the SEC according to different factors.
How Do I Know If I Am an “Eligible Whistleblower”?
The SEC defines an “eligible whistleblower” as a person who voluntarily provides the SEC with “original information” about a possible violation of the federal securities laws that has occurred, is ongoing or is about to occur.
The information provided must lead to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million. One or more people are allowed to act as a whistleblower, but companies or organizations cannot qualify as whistleblowers.
According to the SEC, “original information” is information derived from your independent knowledge or independent analysis that is not already known by the SEC. The SEC describes independent knowledge to mean facts known to you that are not derived from publicly available sources, and independent analysis to mean evaluation of information that may be publicly available but which reveals information that is not generally known.
Also, if the SEC receives your information previously from another person, that information will not be original information unless you were the original source of the information that the other person submitted.
What Type of Information Can I Report Through the SEC Whistleblower Program?
The Frankowski Firm has experience working with whistleblowers to provide the SEC with information about fraud or wrongdoing involving potential violations of the federal securities laws. Below are some types of information that the SEC might be interested in hearing from whistleblowers:
- Ponzi scheme, Pyramid Scheme, or a High-Yield Investment Program
- Theft or misappropriation of funds or securities
- Manipulation of a security’s price or volume
- Insider trading
- Fraudulent or unregistered securities offering
- False or misleading statements about a company (including false or misleading SEC reports or financial statements)
- Abusive naked short selling
- Bribery of, or improper payments to, foreign officials
- Fraudulent conduct associated with municipal securities transactions or public pension plans
- Other fraudulent conduct involving securities
I Want to Learn More About the SEC Whistleblower Program. What’s Next?
The Frankowski Firm is currently assisting whistleblowers. If you believe your company might be participating in securities fraud, please contact us. We will keep your information confidential and protected. Call Richard Frankowski and The Frankowski Firm at 888-741-7503 or complete our contact form to discuss your options to learn how we can help you.