Whistleblower

What Is the SEC Whistleblower Program?

The U.S. Securities and Exchange Commission (SEC) is the federal agency that is responsible for regulating the country’s stock and options markets. The SEC relies on individuals who possess specific information to help them pursue sanctions against those who commit certain types of fraud. The people who come forward to help the SEC are called whistleblowers. In order to incentivize people to report fraud, the SEC rewards whistleblowers handsomely for providing information that leads to sanctions against those who commit financial fraud. All of this is accomplished via the SEC Whistleblower Program

Overview of the Program

Securities fraud is a major problem in the U.S. In order to combat this problem, the federal government enacted the Dodd-Frank Act in 2010, which created the SEC Whistleblower Program. The SEC Whistleblower Program compensates individuals who report securities misconduct. Under the program, whistleblowers can remain anonymous and are protected from employer retaliation. Examples of securities misconduct that whistleblowers may report include:

  • Pyramid schemes and Ponzi schemes
  • Accounting and auditing misconduct
  • Misleading or false SEC reports
  • Failure to file SEC reports
  • Insider trading
  • Embezzlement
  • Theft 
  • Misappropriation of funds and securities 
  • Unregistered or fraudulent securities offerings

Whistleblower Requirements

In order to be eligible for a financial reward under the SEC Whistleblower Program, you must: 

  • Have original information about securities fraud that has happened, is happening, or is about to happen, 
  • Voluntarily provide this information to the SEC, and
  • Provide information that leads to a successful SEC enforcement action with monetary sanctions that exceed $1 million. 

Workplace Retaliation Protection 

The SEC Whistleblower Program protects whistleblowers from workplace retaliation. Specifically, under the program, employers may not demote, fire, threaten, suspend, harass, or discriminate against whistleblowers. Victims of retaliation can sue for back pay, reinstatement,  and other damages. 

Financial Compensation for Whistleblowers

Finally, whistleblowers may be rewarded between 10 and 30% of monetary sanctions over $1 million collected by the SEC in an enforcement action. Some of the factors used to determine the exact percentage of sanctions that a whistleblower may receive are:

  • The significance of the information the whistleblower provides to the SEC,
  • The level of cooperation and assistance provided by the whistleblower,
  • Whether the whistleblower was involved in the reported wrongdoing,
  • Whether the whistleblower obstructed SEC investigations, and
  • Whether the whistleblower acted promptly in reporting the misconduct.

Contact Our SEC Whistleblower Attorney Today 

If you have information concerning financial fraud, you may be entitled to significant financial compensation. However, in order to give you the best chance at recovery, you need an experienced SEC whistleblower attorney on your side. At Newman & Shapiro, we understand the bravery and sacrifice required to become a whistleblower. Therefore, when we accept you as a client, we’ll do everything in our power to help you obtain the maximum reward possible. Please contact us today for a consultation.