Submitting a Tip to the SEC If Involved in the Fraud or Misconduct
The SEC Whistleblower Program is a critical enforcement tool that rewards individuals who provide actionable information related to violations of federal securities laws. However, understanding the eligibility requirements, especially when you've had some involvement in the alleged misconduct, makes things complicated.
Written By
KKC Staff
Reviewed By
Updated
June 21, 2023
The SEC Whistleblower Program is a critical enforcement tool that rewards individuals who provide actionable information related to violations of federal securities laws.
However, understanding the eligibility requirements, especially when you’ve had some involvement in the alleged misconduct, makes things complicated.
This short article aims to clarify whether individuals who have been involved in fraudulent activities can submit a tip to the SEC, and the rules.
We’re thrilled to welcome ex-SEC Acting Chair, Allison Herren Lee, to our team.
Now Of Counsel at Kohn, Kohn & Colapinto, Allison Herren Lee is ready to serve and protect whistleblowers, and help them seek rewards under the Dodd-Frank Act and SEC Whistleblower Program. If you’re an SEC whistleblower seeking to report a concern, contact our law firm today to speak confidentially with Allison Lee.
Eligibility for Submitting a Tip
The SEC Whistleblower Program is designed to incentivize, with protection and rewards, anyone with knowledge of potential securities law violations to come forward. In most cases, anyone can submit a tip to the SEC, regardless of their involvement in the alleged misconduct.
But, what if you participated in the fraud or misconduct?
While your involvement might complicate matters, it does not necessarily disqualify you from submitting a tip or even receiving an award. However, there are some important considerations to keep in mind if you decide to come forward:
Firstly, the SEC does not immunize whistleblowers from the consequences of their own misconduct. If you were involved in the fraud or misconduct, you may still face penalties or legal action from the SEC or other parties.
Secondly, if you were significantly involved in the misconduct, this might impact your eligibility to receive a whistleblower award. The SEC has the discretion to decrease the amount of an award if the whistleblower is culpable.
Finally, the fact that you were involved in misconduct does not affect your obligation to promptly report the wrongdoing to the SEC. Delays in reporting can negatively affect the percentage of the award you might receive.
Mitigating Factors
Despite the potential complications, there are mitigating factors the SEC might consider, including:
- The whistleblower’s role in the misconduct: Was the whistleblower a key player or a minor participant? The degree of involvement matters.
- The whistleblower’s reporting: Did the whistleblower promptly report the misconduct to the SEC, and did the whistleblower try to minimize or mitigate the effects of the misconduct?
- The whistleblower’s cooperation: Has the whistleblower cooperated fully with the SEC’s investigation? This includes providing all known relevant information and evidence.
Given the legal complexities and potential risks, it is advised that individuals in this situation seek legal counsel before submitting a tip to the SEC. An experienced whistleblower lawyer can guide you through the process, help you understand your risks, and help you submit information to the SEC in a manner that maximizes your protection and potential for a reward.
Related FAQs
Our Firm’s SEC Cases
Oil industry’s environmental crimes and cover-up in Colombia have been exposed. Whistleblower Andrés Olarte Peña, with the support of his attorneys Kohn, Kohn & Colapinto and the damning evidence compiled in the Iguana Papers, is calling for an investigation into Ecopetrol and its executives by the Colombian government and the U.S. Securities and Exchange Commission.
Protecting the confidentiality of Wall Street whistleblowers is among the most important breakthroughs in federal whistleblower law. Under the Dodd-Frank Act, whistleblowers can file anonymous cases, and everything about their case, including who they sued, remains secret.
From Our Blog
A Message from SEC Chair Gensler
Former SEC officials lead the firm’s new group, representing whistleblowers who report financial fraud and legal violations to the SEC, CFTC, DOJ, FinCEN, and the IRS.