How Do SEC Whistleblower Awards Work?
As a whistleblower, you play a critical role in uncovering misconduct and protecting the investing public from financial harm. The Securities and Exchange Commission’s (SEC) Whistleblower Program provides an avenue for individuals to come forward with valuable information about violations of U.S. securities laws, while offering significant financial incentives and strong protections against retaliation.
Since the program’s inception in 2011, the SEC has awarded nearly $2 billion to whistleblowers whose information has led to successful enforcement actions. These awards, which can range from 10% to 30% of the monetary sanctions collected, not only recognize the courage and integrity of whistleblowers but also serve as a powerful deterrent against future wrongdoing.
Who Can Receive SEC Whistleblower Awards?
To be eligible for an SEC whistleblower award, you must meet the following criteria:
- You have provided original information: Your information must be derived from your independent knowledge (information not derived from publicly available sources) or independent analysis (your own evaluation of publicly available information).
- You voluntarily provided the information: You must submit your information to the SEC before the agency requests it from you or your employer in connection with an investigation or examination.
- The information led to a successful enforcement action: Your information must have led to a successful SEC enforcement action resulting in monetary sanctions exceeding $1 million.
It is important to note that the SEC’s Whistleblower Program is open to individuals of any nationality, and you do not need to be a U.S. citizen or resident to qualify.
The Whistleblower Award Calculation Process
If you qualify for an SEC whistleblower award, the amount you receive will be determined based on several factors. The SEC will apply a percentage to the total monetary sanctions collected in the enforcement action, which can range from 10% to 30%. The exact percentage is determined by considering a variety of factors, including:
- The significance of the information provided to the success of the enforcement action
- The degree of assistance provided by the whistleblower
- The SEC’s law enforcement interests in making the award
- Whether the whistleblower participated in internal compliance systems
The Whistleblower Award Application Process
If you believe you qualify for an SEC whistleblower award, you must submit a Form WB-APP (Application for Award for Original Information Submitted Pursuant to Section 21F of the Securities Exchange Act of 1934) within 90 days of the SEC posting a Notice of Covered Action. The Notice of Covered Action is a public notice that the SEC has obtained monetary sanctions exceeding $1 million in an enforcement action.
The Form WB-APP requires you to provide detailed information about your whistleblower submission, your eligibility for an award, and the assistance you provided to the SEC’s investigation. The SEC will review your application and determine whether you meet the statutory requirements for an award.
The SEC is committed to protecting the confidentiality of whistleblowers to the fullest extent of the law. Your identity will not be disclosed to the public, the target of the investigation, or even other government agencies, except in very limited circumstances.
To further protect your identity, you can submit your information to the SEC anonymously. However, if you choose to submit your information anonymously and are later determined to be eligible for an award, you will need to provide your identity to the SEC in order to receive the award.
The Importance of Legal Representation
Navigating the SEC’s Whistleblower Program can be a complex process, and the stakes are often high. An experienced SEC whistleblower attorney can help you:
- Evaluate whether you have information that qualifies for an award
- Submit your information to the SEC in a manner that maximizes your chances of receiving an award
- Navigate the award application process
- Protect your identity and minimize the risk of retaliation
If you have information about a potential securities law violation, it is important to consult with an experienced attorney as soon as possible. The SEC’s Whistleblower Program has strict deadlines, and the information you provide could make a significant difference in protecting investors and holding wrongdoers accountable.
The Impact of SEC Whistleblower Awards
The SEC’s Whistleblower Program has had a significant impact on the agency’s enforcement efforts. Since its inception, the program has:
- Generated thousands of high-quality tips: The SEC receives thousands of whistleblower tips each year, many of which have led to successful enforcement actions.
- Recovered billions of dollars for investors: The SEC has collected billions of dollars in monetary sanctions as a result of whistleblower tips.
- Deterred misconduct: The program’s success has sent a strong message to potential wrongdoers that they are more likely to be caught.
By coming forward, whistleblowers play a critical role in protecting the integrity of the financial markets.
If You Are Considering Blowing the Whistle, You Are Not Alone
The decision to blow the whistle is a difficult one. You may be concerned about the potential for retaliation or the impact on your career. However, it is important to remember that you are not alone. The SEC’s Whistleblower Program provides strong protections for whistleblowers, and there are experienced attorneys who can guide you through the process.
If you have information about a securities law violation, contact our legal team as soon as possible. The information you provide could make a significant difference in protecting investors and holding wrongdoers accountable.
