Fighting for Securities Whistleblowers: The SEC Whistleblower ProgramWhistleblowers can receive rewards for reporting on securities law violations.
The U.S. Securities and Exchange Commission (the “SEC”) whistleblower program was created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The program pays incentive awards to persons who report violations of the federal securities laws and regulations where the reported information leads to a successful SEC enforcement action. The program also provides for a whistleblower's anonymity and protection from professional retaliation.
Kirby McInerney advocates for SEC whistleblowers. The Kirby team draws upon the firm’s long-standing track record of successfully representing plaintiffs in securities fraud cases to help SEC whistleblowers navigate the whistleblower process while partnering with SEC enforcement staff.
Kirby McInerney’s SEC Whistleblower Practice
Kirby McInerney, founded over 70 years ago, traces its lineage to the dawn of U.S. securities law, and the firm’s founder was in the first generation of securities lawyers, rendering service to the SEC in its earliest years.
The firm has recovered billions for investors through its securities litigation practice. For example, Kirby McInerney served as lead counsel for lead plaintiffs in In re Citigroup Inc Securities Litigation, No. 07-cv-09901 (S.D.N.Y.) and secured a settlement of $590 million for investors defrauded by the bank’s disclosures concerning exposure to CDOs during the financial crisis.
About the SEC Whistleblower Program
Who Can Be an SEC Whistleblower?Anyone who voluntarily submits original information to the SEC about possible federal securities laws violations can be an SEC whistleblower. “Original information” is information derived from your independent knowledge (facts known to you that are not derived from publicly available sources) or independent analysis (evaluation of information that may be publicly available, but which reveals information that is not generally known) that is not already known by the SEC.
SEC whistleblowers must submit their information directly to the SEC using SEC “tip, complaint, or referral,” or “TCR” forms and procedures, either online or by mail.
How to Become a SEC Whistleblower
Whistleblowers need not to be employee “insiders, ” but can be nearly anyone with original information. For example, any market participants, including clients, competitors, and industry insiders, with information about potential securities laws violations can typically serve as an SEC whistleblower. In addition, SEC Whistleblowers are not required to reside or work in the United States, and the misconduct need not have taken place in the United States so long as it impacted U.S. markets. It is unresolved, however, whether the anti-retaliation protections fully apply to foreign whistleblowers.
SEC whistleblowers are not required to submit their reports to their companies’ internal compliance processes. However, the SEC may consider a whistleblowers’ participation in an internal compliance program in determining the appropriate award amount.
The SEC provides monetary awards to whistleblowers who voluntarily come forward with high-quality original information that leads to an enforcement action in which over $1 million in monetary sanctions is recovered. Importantly, whistleblowers may be eligible to receive an award if the same information led to a related action brought by certain other authorities, such as a parallel criminal prosecution or enforcement action by the Department of Justice or a self-regulated organization such as FINRA. The range for SEC Whistleblower awards is generally between 10% and 30% of the money collected.
SEC Whistleblower Awards
The SEC Whistleblower Program promises whistleblowers a high level of protection against disclosure of their identity. Whistleblowers can choose to submit information to the SEC anonymously – i.e., without providing their identity or contact information – but to do so, they must be represented by, and provide contact information for, an attorney in order to be eligible for an award. In addition, the SEC generally treats information obtained in connection with an investigation as non-public and confidential, with limited exceptions where disclosure is required in connection with criminal or regulatory proceedings.
SEC Whistleblower Confidentiality
The SEC Whistleblower Program also protects against employment retaliations. Employers may not retaliate against whistleblowers for providing information to the SEC—as through discharge, demotion, suspension, threats, harassment, direct or indirect, or any other discrimination against a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower.
SEC Whistleblowers’ Protection Against Employment Retaliation
A whistleblower who has been retaliated against has the right to sue an employer in federal court. In appropriate circumstances, the SEC may also bring an enforcement action against a company for wrongful retaliation.