SEC Whistleblower Program: A Guide to Reporting Financial Fraud

A whistleblower is a person (or persons) who disclose fraud, wrongdoing, abuse, or illegal or unethical practices to authorities to invoke transparency, fairness, and justice.

An SEC whistleblower is someone who voluntarily provides the SEC with original information about a possible violation of federal securities laws. This information must reflect a violation that is occurring or about to occur. It’s possible for one or more people to become a whistleblower, but corporations, organizations, and private companies cannot.

The SEC is responsible for enforcing the Foreign Corrupt Practices Act (FCPA), and under such law, foreign nationals can also become an SEC whistleblower if their information includes bribery of, or improper payments to, foreign officials, among other violations.

There are many types of fraud or misconduct the SEC might investigate for potential violations of securities laws. They are more inclined to investigate a tip if the information is specific, credible, and filed in a timely manner. Below are a few examples of the misconduct the SEC is likely to be interested in:

• Ponzi schemes
• Pyramid schemes
• High-Yield Investment Programs (HYIPS)
• Accounting Fraud
• Market Manipulation
• Insider trading
• Initial Coin Offerings (ICO)
• Cryptocurrency
• Abusive naked short selling
• Bribery
• Money Laundering
• Front Running
• Theft or misuse of funds or securities
• Fraudulent or unregistered securities offering
• False or misleading statements about a company
• False or misleading SEC reports or financial statements

Again, keep in mind that the strong your tip is, the more likely it will be picked up by the SEC. A strong tip might include the names of certain people involved, contain information about specific transactions, or be an email exchange between two parties.

Reporting internally at your company is not required for an award. And there is good reason why. And that’s because there is a long history of insiders reporting their disclosures internally, only to be retaliated against. Thus, we strong advise against using internal hotlines or compliance programs. These programs are designed to protect the company against scandals and investigations from such authorities as the Securities and Exchange Commission.

Even if you choose to report internally, you must also report the information directly to the SEC within 120 days to ensure your internal reporting is considered “reported to the SEC” to become eligible for an award. Also keep in mind that your participation in the internal compliance program may be used to consider award amounts.

Whistleblowers may become eligible for an award only after submitting a tip to the SEC through the online Tips, Complaints and Referrals (“TCR”) portal. Whistleblowers may also submit a physical TCR using the contact information on the SEC’s Submit a Tip page.

Submitting a tip can be done without an attorney. However, this is discouraged for a number of reasons; here’s why:

• Anonymity: An attorney can help you submit your tip anonymously, protecting your identity from potential retaliation.
• Legal Guidance: A qualified attorney can provide expert advice on the legal aspects of your case, ensuring that your tip is submitted effectively and in compliance with all relevant regulations.
• Negotiation: If your tip leads to a successful enforcement action, an attorney can help you negotiate a fair and just award.
• Protection: An attorney can help protect your rights and interests throughout the whistleblower process.

After submitting a tip, whistleblowers can continue to follow up, submit additional information, and keep track of their case using a TCR submission number.

If you’re considering submitting a tip to the SEC, it’s strongly advised to consult with an attorney who specializes in whistleblower law.

Yes, you can submit an anonymous tip to the SEC under the SEC Whistleblower Program. However, to do this, you must have a U.S.-based attorney present, as previously mentioned. Instead of you submitting a TCR, an attorney will do so on your behalf, shielding your identity from becoming public.

An SEC whistleblower’s identity is also protected against FOIA requests. However, in some instances, such as in administrative court proceedings, the identity of a whistleblower may be revealed, or during the investigation process. There are some other occasions when information is also shared with outside agencies (see Rule 21F-7).

It is illegal for an employer to discharge, demote, suspend, harass, or discriminate against a whistleblower for reporting potential securities laws violations under the SEC Whistleblower Program, or for assisting the SEC in an investigation.

Employers who retaliate against a whistleblower may be subject to enforcement action by the SEC. Whistleblowers should also note that they may be able to file a complaint with the U.S. Department of Labor under the Sarbanes-Oxley Act if they experience retaliation.

Once a tip has been received by the SEC, it is reviewed by the Enforcement Division to determine whether it qualifies for further investigation. Given the vast number of tips received by the SEC, not every case will lead to an investigation, unfortunately. This is why it’s important to provide high-quality information that makes the tip worth pursuing.

If your information led to a successful sanction of $1 million or more, you may be eligible to receive an award. You will be able to check this by visiting the Notices of Covered Action (“NoCA”), which is a list of covered actions that exceed $1 million in monetary sanctions.

This doesn’t mean that the SEC is not making any determinations that (a) a whistleblower tip, complaint or referral led to the SEC opening an investigation or filing an action with respect to the case or (ii) an award to a whistleblower will be paid in connection with the case.

Whistleblowers have 90 days to apply for an award. Attorneys representing SEC whistleblowers will be notified of such covered actions in connection with the tip.

As previously stated, whistleblowers must apply for an award no more than 90 days from when the Notice of Covered Action was posted.

To do this, whistleblowers must complete form WB-APP, and return this form to the Office of the Whistleblower by emailing it to or by faxing it to (703) 813-9322, or by mail to the address listed on OWB’s website.

A whistleblower’s claim must be accurate and relevant. Meaning, it must match the enforcement actions. Tips that are false or unsubstantiated will result in the permanent ban from the SEC Whistleblower Program, and failure to properly fill out an WB-APP may result in award denial.

Some other considerations:

• Officer/Director Exclusion: Explain why you’re eligible for an award if you hold such a position.
• Reporting Delay: If you reported late, explain the reason(s).
• Culpable whistleblowers: Describe your involvement in the misconduct and any financial benefits you received. Incomplete explanations may delay processing.

It’s also important to note that you shouldn’t expect status updates while your claim is being processed. Award evaluation might be delayed if appeals are ongoing. You’ll receive notification about the preliminary award determination after claim review.

To increase their award amounts, whistleblowers who have information regarding one of violations listed above should get in touch with an SEC whistleblower attorney immediately.

Our firm is comprised of former SEC acting chair and commissioner Allison Herren Lee, and former SEC Enforcement Attorney Andrew Feller, along with world-renowned whistleblower attorney Stephen M. Kohn, among other leading experts who have been representing whistleblowers for over 35 years.

Our attorneys have written many of the rules that protect and award whistleblowers, and have fought to ensure these laws serve you to the fullest extent possible. There is no better firm for your challenging case than Kohn, Kohn and Colapinto. Get in touch today for a confidential case review – we’re here for!