Do SEC Whistleblowers Have to Be Insiders?
When most people think of whistleblowers, they usually think of corporate insiders braving the wrath of their employer by coming forward to expose fraud or misconduct to the authorities. This has led to the common misconception that the Securities and Exchange Commission (SEC) will only reward whistleblowers who work for the company or firm they’re exposing.
The truth is that being an insider is not a requirement for collecting a whistleblower award. Outsiders can just as easily discover securities fraud as insiders, and the SEC recognizes this fact by rewarding them the same as any other whistleblower.
When Can Outsiders Become SEC Whistleblowers?
According to the SEC whistleblower reward criteria, anyone who encounters evidence of securities fraud that isn’t publicly available could potentially become a whistleblower. The key lies in explaining to the SEC how you discovered the fraudulent activity.
The SEC receives thousands of tips every year, and they can’t possibly act on them all. Because of this, if your outsider tip isn’t convincing, it will likely simply be filed away.
What Makes a Compelling Outsider Whistleblower Tip?
The SEC will want to know how you discovered the securities fraud in question. For example, if you learned of it through conversation with someone who works at the company where the fraud is occurring, they’ll want to know the full details of this social interaction, likely including who the individual was.
You might also have discovered the fraud through observation and independent analysis. For example, perhaps you’ve been following the company closely enough that you can disprove the accuracy of their latest earnings report. If so, the SEC will be interested in evaluating your analysis.
You Don’t Have to Be an Insider to Blow the Whistle
In the end, the SEC doesn’t really care if you’re a company outsider when it comes to blowing the whistle on fraud. As long as your evidence is compelling and not publicly available, there’s a chance that the SEC will launch an investigation and reward you with a cut of the sanctions collected.
To find out if your tip will meet the SEC criteria and what you should expect, get in touch with Meissner Associates. Our firm’s founder helped write the SEC regulations that reward and protect whistleblowers, and we can help you regardless of whether you’re an outsider or a corporate insider.
For a free and confidential tip evaluation, simply complete the form below or call us at 1-866-764-3100.