Under the SEC and CFTC Whistleblower Program rules, individuals who blow the whistle to FINRA can qualify for awards from the SEC and CFTC as long as they file a formal disclosure with the SEC within 120 days of blowing the whistle to FINRA or with the CFTC within 180 days.
To qualify for an award, the information a FINRA whistleblower voluntarily provides to regulators must lead to a successful SEC or CFTC action with fines of more than $1,000,000. Depending on several factors, whistleblowers will receive 10 to 30 percent of proceeds from the sanctions against a fraudster.
In order to file their SEC or CFTC disclosure anonymously, a whistleblower must hire an attorney. An experienced whistleblower attorney can also ensure that a whistleblower’s disclosure leads to the highest award possible and that the whistleblower is protected from retaliation from their employer.
Steps to Qualify for a Whistleblower Award as a FINRA Whistleblower
If an individual has reported potential securities or commodities law violations to FINRA they can qualify for a whistleblower award by completing the following steps. By filing a whistleblower disclosure to the SEC or CFTC, a whistleblower is also protected from retaliation under the Dodd-Frank Act.
1. Hire an Experienced Whistleblower Attorney
It is highly recommended that an individual hire an experienced whistleblower attorney before filing with the SEC or CFTC. In order to file a disclosure anonymously, a whistleblower must hire an attorney. Furthermore, an experienced attorney will help a whistleblower understand their rights, ensure their claim meets all of the requirements of the whistleblower program, and walk them through the whistleblower award filing process.
2. Promptly File a Form TCR
To qualify for a whistleblower award, a whistleblower must formally file a whistleblower disclosure with the SEC or CFTC. To formally file a whistleblower complaint, a whistleblower must submit a Form TCR to the appropriate agency.
After first blowing the whistle to FINRA, a whistleblower has 120 days to file a Form TCR with the SEC and 180 days to file a Form TCR with the CFTC. If a whistleblower meets this deadline, the SEC and CFTC will recognize the whistleblower as having voluntarily provided the original information on the date they made their disclosure to FINRA.
A whistleblower should provide the SEC and CFTC with the same information they provided FINRA. A whistleblower should ensure the information they include on their Form TCR is specific, credible, and timely. Experienced whistleblower attorneys can assist in properly filling out a Form TCR.
3. Cooperate with the Enforcement Staff
To help ensure that their information leads to a successful enforcement action, a whistleblower should cooperate with the Enforcement staff of the SEC and CFTC. In determining the exact percentage for a whistleblower award, the SEC and CFTC positively evaluate the degree of assistance provided by the whistleblower. This can take the form of identifying witnesses, interpreting documents, and participating in interviews.
4. File a WB-APP After a Notice of Covered Action is Posted
To qualify for an award, a whistleblower’s information needs to have contributed to a successful SEC or CFTC action in which the government recovered over $1,000,000 in sanctions. For every such action, the SEC and CFTC post a Notice of Covered Action on their whistleblower office website.
A Notice of Covered Action signals that whistleblowers who provided information related to the action should now submit award applications. Whistleblowers have 90 days after a Notice is posted to file a WB-APP claiming an award for that case. An experienced whistleblower attorney can help a whistleblower promptly and accurately file a form WB-APP.
