SEC Whistleblowing: Not Employment Law

When an honest person has witnessed major financial fraud, that individual has the opportunity to do the right thing by becoming a whistleblower and exposing the guilty organization to the proper authorities. Our financial system works only when everyone follows the rules, and although it may take great personal courage to speak up when you see someone else breaking the rules, that’s the only way to keep the system safe and fair.

When it’s time to blow the whistle, many people turn to an employment lawyer. But that’s not the right approach. Only an experienced SEC whistleblower attorney can provide the right representation.

Whistleblowers Don’t Sue; They Act As Witnesses

There’s confusion out there when it comes to whistleblowing, especially when it involves securities violations. Many potential whistleblowers believe—incorrectly—that when they blow the whistle on the illegal activities of an employer or former employer the case will be resolved under employment law. But when it comes to SEC violations, these cases aren’t in the realm of employment law at all.

Employment law deals with situations where an employer has acted wrongly against an employee, such as with discriminatory hiring practices, workplace harassment, or wrongful termination. In these cases, an employee usually files suit directly against an employer for the harm he or she has personally suffered.

In a whistleblowing case, the employee is not actually a party to any legal action. The lawsuit is instead filed by a government agency—the SEC—for violating the rules and causing harm to the system and many other people. The whistleblower might serve as a witness in the case, but usually his or her identity is not usually revealed. In fact, it might not be made public that a whistleblower was even involved in the SEC’s case.

Broad Economic Impact

The value of whistleblower information to the smooth functioning of the financial system can’t be overstated. When cases like this are brought, it benefits many individuals and institutions.

Often, the company involved is itself a victim, and the fraud has hurt its bottom line. Investors in a company can be directly harmed when their capital and profits are siphoned into fraudulent dealings. Some frauds can tarnish the reputation of an entire industry, harming the profitability of numerous companies, affecting many investors, and in the worst cases putting the jobs of those who work at those companies at risk (think of Enron: At least 4,000 people lost their jobs in the immediate wake of that company’s scandals).

Blowing the whistle on fraud like this not only protects companies, investors, and workers, it strengthens trust in the overall system. Financial regulators and the government gain, too, by demonstrating their effectiveness and proving to taxpayers that their involvement provides value. The only ones who lose are those caught committing the fraud.

Whistleblower Incentive

There’s one more important beneficiary: the whistleblower. Since the passage of the Dodd-Frank Act in 2010, these honest individuals—whistleblowers who recognize that integrity and fairness are the foundations of a financial system that operates on a level playing field for everyone—have had more incentive to report large frauds and crimes.

For more than twenty years, financial rewards were available to those who reported this kind of wrongdoing, but the types of fraud covered, the amount of the rewards, and the list of people who were eligible to blow the whistle were all limited. Now, many more employees are able to report this kind of wrongdoing as whistleblowers, and they can be well-compensated for their honesty: If the SEC successfully pursues a case based on the information a whistleblower provides, and more than $1 million in sanctions are obtained, the whistleblower will receive a bounty of between 10 and 30 percent of the amount.

SEC Whistleblower Attorney

At Meissner Associates, we have extensive experience representing SEC whistleblowers. We work with employment law firms, and because many know our record and reputation, when they receive an inquiry for a whistleblower case, they refer it to us.

We have experience representing clients during their dealings with the SEC Office of the Whistleblower. In fact, we’ve been representing clients in this kind of case since 2001, years before there was a dedicated office at the SEC. Our clients can count on both our experience and our dedication.

If you are considering becoming a whistleblower, or if you’ve decided that it’s time to blow the whistle, give us a call at 1-866-764-3100 or contact us online through the form below for a free tip evaluation. Regardless of how you contact us, confidentiality is strictly guaranteed.