What Is an SEC Whistleblower?
What Is an SEC Whistleblower?
Many people have heard the term “SEC whistleblower” without actually understanding what it means. It’s possible that you’re in a position to become an SEC whistleblower and reap the resulting financial rewards without even realizing it.
Explaining what a whistleblower is first requires explaining what the SEC is. The Securities and Exchange Commission is an agency within the US federal government. It is their duty to propose and enforce securities laws and regulate the securities industry and stock exchanges. They can use all the help they can get, however, which is where whistleblowers come in.
The Role of Whistleblowers
The SEC’s mission is not an easy one. Few industries are as complicated as securities, and there are so many ways to hide and obscure financial misconduct that the SEC would be hard-pressed to do so on their own.
To that end, the SEC encourages anyone with knowledge of securities violations to report what they know so that an investigation can then expose the wrongdoing. These individuals are known as “whistleblowers” as they effectively “blow the whistle” on the illegal activity that they encounter.
Incentives and Protections for Blowing the Whistle
The SEC rewards whistleblowers for having the courage to provide the government with the information it needs. If an SEC whistleblower provides a tip that results in monetary sanctions in excess of $1,000,000, then that person could be eligible to receive a reward of between 10 and 30 percent of the amount collected by the SEC.
Under the Dodd-Frank and Sarbanes-Oxley Acts, whistleblowers are also legally protected against retaliation from the company whose fraudulent activities they exposed. If you blow the whistle on your employer, for example, they cannot fire, demote, harass, or threaten you. Doing so could entitle you to reinstatement, double back pay, and reimbursement for the cost of attorney and court fees.
How Do I Become an SEC Whistleblower?
In order to blow the whistle on Wall Street corruption and securities violations, you must first possess original information that was previously unknown to the SEC. This means that you have to submit your tip before another whistleblower can. However, you don’t want to be in too great of a hurry, as the SEC will want you to first report what you know to any internal compliance programs of the company in question. Failing to do so could reduce the percentage of the sanctions that you are rewarded with.
Your tip must also be voluntary. You won’t be eligible for a bounty if your whistleblowing is required by an SEC request or a Congressional, federal, state, or regulatory investigation. Essentially, if you are being compelled or are legally or contractually obligated to provide your information, you won’t be considered an SEC whistleblower.
Is There Anyone Who Can’t Be an SEC Whistleblower?
There are some situations where a person might not be eligible to recover a whistleblower bounty because of how the securities violation was discovered. For example, attorneys are generally excluded from becoming SEC whistleblowers if they discover a securities violation through attorney-client privilege.
Internal company auditors and compliance officers are also often excluded. That being said, there are some situations where an auditor or compliance officer can become an SEC whistleblower. If the misconduct in question will cause substantial injury to a financial interest, will impede an investigation, or was properly disclosed internally over 120 days ago and not acted upon, then these individuals might be eligible.
Contrary to popular belief, if you were involved in the securities violation, you can still become an SEC whistleblower. However, you could be open to criminal prosecution for your involvement and so should first discuss your liability with an SEC whistleblower lawyer. Additionally, your involvement will also likely reduce your potential financial reward.
What Are the Biggest Whistleblower Rewards Paid by the SEC?
The financial rewards for submitting a successful tip can result in a bounty worth millions of dollars. These are the five largest rewards so far paid by the SEC to whistleblowers:
- $30 Million – This reward was paid to a non-US citizen and was said by the SEC to have exposed fraud that would have been incredibly difficult to discover without the help of the whistleblower.
- $22.4 Million – Meissner Associates helped a former Monsanto financial officer expose weak internal financial controls. This reward is the largest so far paid to a US citizen.
- $17 Million – This whistleblower actually helped the SEC conclude an investigation that was already in progress.
- $14 Million – This amount was awarded to an SEC whistleblower who exposed fraudulent offers involving EB-5 investments and targeting foreign nationals.
- $7 Million – This reward was split between three different whistleblowers who each provided original information at different points in the investigation of an investment scheme.
Whistleblowers Can Be Anonymous
As you can see, the incentives for becoming an SEC whistleblower are significant and commensurate with the courage it takes to step forward and expose securities violations. Thankfully, the SEC allows whistleblowers to submit their tip anonymously when they work through an appropriately licensed attorney.
Working through a lawyer not only protects your identity, but it also allows you to find out how strong your information is ahead of time and whether it’s likely to result in an SEC investigation and eventual reward.
Free and Confidential Tip Evaluation
Meissner Associates is an experienced SEC whistleblower firm that is responsible for recovering the largest reward yet paid by the SEC to a US citizen. As we are a small, boutique firm, you will benefit from the personal attention that we give to you and your information.
Find out if your knowledge of a securities violation could result in a financial reward worth millions of dollars. The tip evaluation that we offer is completely confidential and will be honest and direct. To become an SEC whistleblower, simply complete the form below or give our office a call at 1-866-764-3100.