What Makes an SEC Whistleblower Tip Voluntary?
The Securities and Exchange Commission (SEC) has several requirements that a whistleblower tip must meet in order to be eligible for a reward. Failing to meet these criteria can reduce the amount of the whistleblower’s reward—even making the whistleblower completely ineligible in some cases.
One of the most important of these criteria is the requirement that the whistleblower’s tip be voluntarily submitted. So what makes an SEC whistleblower tip voluntary?
The Tip Cannot Be Compelled
To be voluntarily submitted, the information cannot have been provided as the result of a request or demand from a government or regulatory body. If the tip is being legally compelled in any way, the SEC will not view it as having been voluntarily submitted.
These are the most common entities that could compel material information, in which case the criteria of voluntary submission would not be met:
- The SEC
- Other industry regulatory bodies
- A court of any level
- Other state or federal government bodies
The Tip’s Submission Cannot Be a Duty
In addition to legal and formal requests, a whistleblower tip will not be considered voluntary if its submission is a legal or contractual duty. For example, an auditor might have a contractual duty to present his or her findings of misconduct to the SEC, thereby preventing the auditor from being recognized as a whistleblower.
Likewise, some individuals could have a legal duty to report the securities fraud they’ve discovered. This duty is viewed as compulsion, and it makes the whistleblower tip involuntary and thus ineligible for a reward.
Contact Meissner Associates
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