What Is an SEC Whistleblower?
Meet the Whistleblowers
The SEC whistleblower program operates under the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in response to the 2008 financial crisis. The program is managed by the SEC’s Office of the Whistleblower, which falls under the Division of Enforcement.
Like most federal whistleblower programs, the SEC program was created to encourage individuals with evidence of fraud and other violations to come forward. Under the program, whistleblowers are eligible to receive awards of between 10% and 30% of the amount recovered in a successful enforcement action, provided that the amount recovered exceeds $1 million.
Understanding the SEC Whistleblower Program
The SEC’s Office of the Whistleblower states that it “was established by Congress to incentivize whistleblowers to report specific, timely and credible information about possible federal securities laws violations.” The SEC encourages whistleblowers to come forward by (i) providing them with confidentiality protections to the fullest extent allowed by law, (ii) prohibiting retaliation by employers, and (iii) offering substantial financial incentives.
Here is how the SEC’s whistleblower program works:
- Initiating the Whistleblower Process – To initiate the whistleblower process, you must submit a complaint to the SEC’s Office of the Whistleblower. While you can do this on your own, you have the option to work with an SEC whistleblower lawyer who can submit a “tip, complaint or referral” (TCR) on your behalf. TCRs must be submitted by filing Form TCR online or by mailing or faxing a copy of the form to the SEC’s Office of the Whistleblower.
- Investigating the Whistleblower’s Allegations – Once you submit a whistleblower TCR, the SEC’s Enforcement Division will assign an enforcement attorney to review your submission. If the enforcement attorney determines that your allegations warrant further inquiry, your submission will be assigned to an SEC investigative team. The team will then investigate your allegations to determine whether an enforcement proceeding is warranted.
- Initiating and Winning an Enforcement Proceeding – If the SEC’s investigative team determines that an enforcement proceeding is warranted, it will refer the matter to the SEC’s Division of Enforcement for prosecution. The SEC’s Enforcement Division will then seek a favorable result (i.e., a settlement or judgment) in court. If the SEC’s enforcement proceeding results in more than $1 million in sanctions, you may be eligible to receive a whistleblower award.
- Receiving a Whistleblower Award – If you are eligible to receive a whistleblower award, the SEC’s Office of the Whistleblower will post a Notice of Covered Action online. You will then have 90 days to submit an SEC whistleblower award application (Form WB-APP). If your award application is granted, you will receive between 10% and 30% of the amount the SEC recovers.
- Applying for a Whistleblower Award in Multiple Proceedings – If you are eligible to receive a whistleblower award, you may be entitled to receive an award in multiple proceedings. Under the SEC’s rules, “the Commission will pay an award based on the total monetary sanctions collected in the Commission action or related action unless the criteria for making a separate award determination in a related action are satisfied.” In either case, the commission will award between 10% and 30% of the amount recovered, and you will need a lawyer to help you pursue the full amount to which you are legally entitled.
FAQ: Understanding the SEC Whistleblower Program
What Is an SEC Whistleblower?
An SEC whistleblower is an individual who submits a complaint to the SEC’s Office of the Whistleblower. Whistleblowers can report fraud and other violations in the financial markets, as well as violations of the federal securities laws (i.e., the Securities Act of 1933 and the Securities Exchange Act of 1934) by publicly traded companies. Whistleblowers can also report violations of the Foreign Corrupt Practices Act (FCPA).
Can I File an SEC Whistleblower Complaint Anonymously?
Yes, you can file an SEC whistleblower complaint anonymously. However, doing so requires the help of a lawyer. The SEC’s Office of the Whistleblower states that, “the whistleblower must be represented by, and provide the Commission with contact information for, counsel in connection with the submission of information to the Commission and the claim for an award in connection with the information submitted to the Commission.”
