Get An Award for Financial Crimes: A Whistleblowing How-To Guide

Whistleblowers may receive awards for reporting concerns about financial crimes to U.S. regulators or authorities. These entities enforce laws against financial misconduct through sanctions, fines, settlements, or damages.

However, it is impossible for these authorities to impose such penalties without first obtaining strong, credible, and original information from an insider who has information of such a crime. This is where whistleblowing comes in – an invaluable tool for exposing financial misconduct.

Insiders or employees who know of financial crime taking place have the right to report their concerns to regulators, regardless of the agreements they’ve signed with their company. In exchange for their whistleblower tip or information, they may qualify for a percentage of the fines or sanctions collected in a successful enforcement action.

Below are the U.S. laws and programs currently available to whistleblowers which offer awards and other damages resulting from retaliation or unemployment.

Official Website: https://www.justice.gov/civil/false-claims-act

This law provides an award to whistleblowers (known as a relator) between 15% and 30% of what the government collects in a successful recovery in a qui tam lawsuit.

Award percentages depend mostly on whether the government decides to intervene, the quality of information provided, and how involved the whistleblower was in an investigation. The government can also collect treble damages, collecting three times the money lost to a financial crime.

The type of financial crime reported can include healthcare fraud through Medicare, defense contractor fraud, and procurement fraud, among other types.

The Department of Justice recovered over $2.68 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending September 30, 2023.

Eligibility requirements under the False Claims Act include: 

• Original Information: This simply means that the information you provide must not already be known to the government.
• Voluntary Disclosure: This means you must come forward on your own, not coerced or pressured into providing information.
• Filing Under Seal: This refers to the act of filing your complaint “under seal,” which allows the government to investigate without the defendant knowing.

It’s important to note that under the False Claims Act, if a whistleblower breaks the seal, this will automatically disqualify them for an award.

Whistleblowing can result in retaliation from their employer, and there are protections available under the False Claims Act. They may also be entitled to relief, such as reinstatement, back pay, award interest, and other damages, if the individual is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.

There are several steps to filing a qui tam lawsuit, which includes the following key steps:

• Gathering Evidence: It’s important to collect evidence to support your case. This might include emails, documents, financial records, or other testimony.
• Hire An Attorney: Under the False Claims Act, it is required that whistleblowers hire an attorney to help them through the process and negotiate on their behalf.
• File a Complaint: The complaint is filed under seal (as mentioned above) in a federal district court with the assistance of an attorney. They must also be the first to file.
• Government Intervention: The government has 60 days to decide whether they’ll intervene and proceed with action once it receives the complaint and evidence.
• Discovery: If the government intervenes, they will take over the litigation and proceed with litigation and/or further investigation.
• Trial: These cases generally settle, but if they do not, the case goes to trial and it’s up to the government to prove that the defendant submitted false claims.
• Recovery: If the government wins a case, the qui tam relator may be eligible for a portion of the recovery, between 15% and 30%.

It’s important that whistleblowers file in a timely manner. Failure to do so may result in the government deciding not to intervene or lowering the award percentage.

For more information, please read What Is Qui Tam? A Comprehensive Guide.

Official Website: https://www.sec.gov/enforcement-litigation/whistleblower-program

Under the SEC Whistleblower Program, whistleblowers may be eligible to receive an award between 10% and 30% of a successful recovery. For a whistleblower to become eligible for an award, the information provided must lead to a successful SEC enforcement action resulting in an order of monetary sanctions exceeding $1 million.

There are many award factors that determine the percentage a whistleblower receives. For instance, the SEC may increase an award given the significance of the information provided, the extent to which assistance was provided in an investigation, and the SEC interest in the financial crime at deterring violations, among other factors. Awards may be reduced if a whistleblower was part of the fraud or scheme, or if there was a delay in reporting.

The type of financial crime reported can include market manipulation, insider trading, Ponzi schemes, high-yield investment programs, broker-dealer misconduct, and more. For a full list of potential securities violations, please view our List of SEC Violations.

In FY 2023, the Commission awarded nearly $600 million—the highest annual total by dollar value in the Program’s history—to 68 individual whistleblowers.

Key Award Eligibility Requirements Under the SEC Whistleblower Program Include:

• Original Information: You must provide the SEC with original information about a possible violation of the federal securities laws. This means the information must be new to the SEC and not already known to them.
• Voluntary Disclosure: You must voluntarily provide the information to the SEC. You cannot be coerced or pressured into coming forward.
• Successful Enforcement Action: The information you provide must lead to a successful SEC enforcement action resulting in an order of monetary sanctions exceeding $1 million.
• Timely Disclosure: You must submit the information to the SEC before the agency has already reported the violation.

Anonymous whistleblowing is permitted under the SEC Whistleblower Program, but only when represented by a U.S. attorney. Also, to receive an award, whistleblowers must be represented by an attorney. The SEC has a strong track record of protecting the confidentiality of whistleblowers, whether they are anonymous or not.

Lastly, under the Dodd-Frank Act Section 21F, individuals who report possible violations of federal securities laws are protected against retaliation. Whistleblowers may also be able to file a retaliation complaint in federal court under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”).

Official Website: https://www.whistleblower.gov

Under the CFTC Whistleblower Program, whistleblowers may be eligible for an award between 10% and 30% of a successful recovery. For a whistleblower to become eligible for an award, the information provided must lead to a successful CFTC action resulting in monetary sanctions exceeding $1 million based on information about violations of the Commodity Exchange Act (CEA).

The CFTC considers many factors, including unique facts and circumstances of each case, when determining the amount of an award. Such as: the significance of the information provided to the CFTC to the success of a CFTC action or related action, the degree of assistance provided by the whistleblower, and their interest in deterring violations. Like with the SEC, awards may be reduced if a whistleblower was involved in the scheme, or delayed reporting.

The type of financial crime reported can include price manipulation, spoofing, commodity pool fraud, insider trading, recordkeeping violations, and other violations of the CEA.

The CFTC’s Whistleblower Program, established in 2014, has awarded $370 million to whistleblowers. These awards have contributed to enforcement actions that have recovered more than $3.2 billion.

Key Award Eligibility Requirements Under the CFTC Whistleblower Program Include:

• Original Information: You must provide the CFTC with original information about a possible violation of the Commodity Exchange Act or the regulations thereunder. This means the information must be new to the CFTC and not already known to them.
• Voluntary Disclosure: You must voluntarily provide the information to the CFTC. This must be provided prior to a request, inquiry, or demand for information.
• Successful Enforcement Action: The information you provide must lead to a successful CFTC enforcement action resulting in a monetary sanction exceeding $1 million.
• Timely Disclosure: You must submit the information to the CFTC before the agency has already reported the violation.

A whistleblower is eligible for an award when they send the Commission a Form TCR containing information about a potential violation of the Commodity Exchange Act. Below is an overview of this process:

• Evidence Collection: The CFTC is seeking credible evidence, such as documents, emails, detailed records, contracts, or internal memos.
• Legal Representation: While whistleblowers can file a complaint directly with the CFTC, having an attorney represent them is strongly recommended, especially if they intend to claim an award.
• Submitting a Tip: The whistleblower or their attorney should submit a Tips, Complaints and Referrals (TCR) form to the CFTC, along with supporting evidence and documentation.
• CFTC Review: Upon receiving a complaint, the CFTC will review it to determine if further investigation is warranted.
• Award Eligibility: If your information leads to a successful enforcement action resulting in a sanction of $1 million or more, you may be eligible for a whistleblower award. To claim an award, you must submit an application within 90 days. You can find a list of eligible actions, known as Notices of Covered Action (“NoCA”), on the CFTC’s website.

Whistleblowers can remain anonymous under the CFTC Whistleblower Program. The CFTC has a proven history of safeguarding the confidentiality of all whistleblowers, regardless of whether they choose to remain anonymous.

Like the SEC Whistleblower Program, under the Dodd-Frank Act, whistleblowers are protected against retaliation by their employer.

This means, they may not discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against a whistleblower in the terms and conditions of employment for coming forward with information about possible violations of the CEA.

Official Website: https://www.fincen.gov

Under the FinCEN Whistleblower Program, whistleblowers may be eligible to receive an award of up to 30% of the total sanctions collected from an enforcement action. The award is determined on a case-by-case basis, considering the significance of the information provided and assistance provided by the whistleblower in an enforcement action.

Financial crimes under this program include violations of the Bank Secrecy Act (BSA), such as failure to file Suspicious Activity Reports (SARs), Know Your Customer (KYC) violations or failure to obtain adequate information about customers or verify their identity, and sanctions violations.

Whistleblowers can also receive an award if they report money laundering, terrorist financing, foreign bribery, or other types of securities and mortgage fraud.

Key award eligibility requirements under FinCEN’s Anti-Money Laundering Whistleblower Program include:

• Original Information: You must provide the government with original information about a possible violation of the BSA or the implementing regulations. This means the information must be new to the government and not already known to them.
• Voluntary Disclosure: You must voluntarily provide the information to the government. You cannot be coerced or pressured into coming forward.
• Successful Enforcement Action: The information you provide must lead to a successful enforcement action against a person or entity that has violated the BSA or the implementing regulations.
• Timely Disclosure: You must submit the information to the government before the agency has already reported the violation.

In cases involving money laundering and violations of the Bank Secrecy Act (BSA), it’s advised that you work with an attorney with expertise in transnational crime. Once you’ve hired an attorney, the process to reporting sanctions violations is as follows:

• Submission of Information: With the help of their attorney, whistleblowers submit the relevant information to the appropriate department within the Treasury or to OFAC.
• Investigation: The U.S. government will evaluate the information provided, which may trigger a larger investigation into the alleged violations.
• Determination and Award: If the investigation results in the collection of sanctions above the threshold of $1 million, the whistleblower may be entitled to an award.

Those who wish to report their concerns anonymously must hire a U.S. based attorney. An attorney can also help protect you against retaliation, assist in evidence collection, maximize potential awards, and negotiate on your behalf.

Violations may include failure to file required reports, structured transactions, recordkeeping violations, Know Your Customer (KYC) failures, money laundering, or terrorist financing, among many other violations.

Official Website: https://www.justice.gov/criminal/criminal-fraud/foreign-corrupt-practices-act

Under either the SEC or CFTC Whistleblower Program, a U.S. or international whistleblower may receive an award of between 10 percent and 30 percent of the total monetary sanctions collected, if the SEC or CFTC sanctions a fraudster over $1 million dollars

Enacted in 1977, the Foreign Corrupt Practices Act (FCPA) is a U.S. law that prohibits the payment of anything of value to foreign government officials to obtain a business advantage. This includes foreign bribery, kickbacks, money laundering, and financial crimes.

In 2023, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) resolved 13 corporate FCPA matters for $733 million in penalties, disgorgement, and interest.

• False Claims Act: If the violation involves a false claim against the U.S. government, you may be eligible for an award under the False Claims Act.
• SEC Whistleblower Program: If the FCPA violation involves a violation of the securities laws, you may be eligible for an award under the SEC Whistleblower Program.

Whistleblowers can file a complaint with the Department of Justice (DOJ) or the Securities and Exchange Commission (SEC). The complaint should provide detailed information about the alleged violations, your relationship to the company or individual involved, and any supporting evidence.

Whistleblowers are protected from retaliation under the FCPA. However, having an attorney present is a good idea, as they can help you in several ways, such as helping maximize award amounts, and helping you navigate the complex legal landscape.

Official Website: https://www.irs.gov/compliance/whistleblower-office

Under the IRS Whistleblower Award Program, whistleblowers may be eligible for an award of between 15% and 30% of what the government collects, when the taxes, penalties, interest, and other amounts exceed $2 million.

There are many award factors that determine the award percentage, such as the timeliness of the reporting, originality of the information provided, cooperation, among other factors. Awards may be decreased if a whistleblower was involved in a tax issue or failed to follow IRS guidelines.

The types of violations may include tax evasion, money laundering, offshore tax havens, insider trading, and fraud, such as filing fake returns.

In Fiscal Year 2023, the IRS paid awards totaling $88.8 million based on whistleblower information attributable to tax and other amounts collected of $338 million.

Key award eligibility requirements under the IRS Whistleblower Award Program:

• Original Information: You must provide the IRS with original information about a violation of the Internal Revenue Code. This means the information must be new to the IRS and not already known to them.
• Voluntary Disclosure: You must voluntarily provide the information to the IRS. You cannot be coerced or pressured into coming forward.
• Successful Enforcement Action: The information you provide must lead to a successful IRS enforcement action resulting in a monetary penalty of $2 million or more.
• Timely Disclosure: You must submit the information to the IRS before the agency has already reported the violation.

The whistleblower award process under the IRS Whistleblower Program can take several years. Below is a generalized overview of how to do this:

• Gather Evidence: Whistleblowers need to collect specific and credible evidence about the tax violation to support their allegations. This includes tax documents, emails, recordings, or other financial data.
• Hire an Attorney: An attorney can help you navigate the process of filing a report, and also help you get the highest award possible if you become eligible.
• Submit a Claim: You or your attorney will then file IRS Form 211, which is called the Application for Award for Original Information.
• Investigation: Once a claim is submitted, an analyst from the IRS will process it and decide whether to reject the claim, or file it under 7623 (a) or (b) as per the Internal Revenue Code.
• Final Determination: You will receive a final determination in writing. Those under 7623 (b) may be appealed within 30 days to the U.S tax court. Those under 7623(a) may not.

IRS whistleblowers are not eligible to file anonymously. However, the IRS fully protects the confidentiality of whistleblowers.

Whistleblowing is an essential tool for fighting financial crime. By reporting such crimes, whistleblowers can help uncover fraud, waste, and abuse, and hold those who violate the law accountable, while protecting the public from harm.

Becoming a whistleblower is a very serious decision to make. However, the potential for awards and the satisfaction of doing what’s right can far outweigh the risks. It’s extremely important to get in touch with a whistleblower award attorney before taking any action.

If you have information about a financial crime and are seeking an award, do not hesitate – delays in filing a tip or complaint can limit your award amount.

And remember, you are not alone. There are resources to support whistleblowers, including legal assistance and non-profit advocacy groups. By seeking help and guidance, you can increase your chances of success and minimize the risks associated with whistleblowing.