What is an SEC Whistleblower?

An SEC whistleblower is a person who provides the SEC Office of the Whistleblower with original, timely and credible information regarding a violation of federal securities laws. Such violations include ponzi schemes, pyramid schemes, high-yield investment programs, theft or misuse of funds or securities, insider trading and many other forms of financial frauds.

An SEC whistleblower may be eligible for a whistleblower reward. Whistleblower awards can range anywhere between 0 and 30 percent when the monetary sanctions exceed 1 million, and the money collected in legal actions brought by the SEC and other agencies. To be eligible, the information provided to the SEC must lead to a successful action resulting when order of monetary sanctions against the fraudster exceed $1 million.

When the SEC pays whistleblower awards, all payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.

Individuals or groups of persons are eligible to become SEC whistleblowers, but companies cannot qualify. Whistleblowers may be employees of the company, a contractor, or anybody with intimate knowledge of the fraud being committed. Eligibility depends on the depth and breadth of information provided – it must follow a certain set whistleblower rules as described in Section 21F of the Securities Exchange Act of 1934.

If you’ve been a witness of securities violation and would like to report it, you may do so anonymously. However, to be eligible for an award, you must have an attorney represent you in connection with your filing. The SEC will take precautions to ensure your identity is protected throughout the investigation process.

Furthermore, if you’re being retaliated against, the SEC may bring successful enforcement action against a company. There are multiple laws that protect securities fraud whistleblowers who experience retaliation, including the Dodd-Frank and Sarbanes-Oxley Act. The best way to prevent retaliation is to not report to internal compliance. These departments are generally established to benefit the company – not the whistleblower.

For information about the securities and exchange commission program, including eligibility requirements and the limitations that apply, please see Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Amended Rules implementing the program.

Filing an official complaint form with the SEC’s Office of the Whistleblower is the first step a whistleblower should take in to submit a tip to the SEC about a potential violation. This form is known as a “TCR” and stands for “tip, complaint, and referral.” The form can be filled out on-line or faxed.

It is to a whistleblower’s advantage to file this form as quickly as possible. The SEC whistleblower rewards can only be paid based on “original” information and to the whistleblower who first alerts the Commission to a potential violation stands the strongest chance of obtaining the largest reward.

Supporting information can and should be filed with the TCR.

After that, if the SEC is interested in the case submitted by the whistleblower, the SEC will initiate an investigation. You can also file TCRs concerning ongoing cases. The whistleblower only needs to provide original information that is used by the Commission as the basis of any ultimate sanction.

If the SEC sanctions an individual or company $1 million or more, the case then moves to the second stage, the filing of the formal APP award application.

Our SEC whistleblowers have triggered over $1.5 billion in recoveries under the securities laws and related criminal laws. During the Dodd-Frank rulemaking process, Kohn, Kohn and Colapinto’s partners worked closely with the SEC to create an effective whistleblower program. If you’re in search of top SEC whistleblower representation, get in touch with us today. One of our founding partners reviews each and every intake submitted.