SEC Confidential Whistleblower

Protecting the confidentiality of Wall Street whistleblowers is among the most important breakthroughs in whistleblower law. Under the Dodd-Frank Act, whistleblowers can file anonymous cases, and everything about their case, including who they sued, remains secret. Our whistleblowers have prevailed in significant cases, including one of the largest SEC awards granted to date. To maintain the secrecy of this whistleblower, we can only report that he or she obtained an award within the top-five ever given by the SEC, i.e., an award of over $30 million.

The right to file an anonymous claim is the single most crucial protection afforded whistleblowers from retaliation. If a company or fraudster does not know who the whistleblower is, the wrongdoer cannot retaliate. Conversely, if a whistleblower can maintain complete confidentiality, he or she can remain employed and be in a position to serve as a confidential informant, continuing to update information on the illegal conduct.

Thus, the strict confidentiality and anonymity provisions of the Dodd-Frank Act serve the interests of both the individual whistleblower and the government. It also serves as a powerful deterrent against fraud, as top corporate officials (and their lawyers) will fear that one of the insiders whom the work with could become an anonymous whistleblower, obtain millions in rewards. Yet, the company would never know who the rat-fink was.

The anonymity rules published by the SEC and CFTC contain internal quality assurance protections that shield the government form fraudulent claims. A whistleblower is required to hire a licensed U.S. attorney to file a case anonymously. That attorney must verify the identity of the anonymous whistleblower and obtain a signed and written complaint from the whistleblower. Once the attorney has done his or her due diligence in ensuring that the anonymity rules are not abused, the attorney must sign the official complaint file with the SEC or CFTC. The attorney becomes liable for any fraud or abuse. Requiring an attorney to act as an intermediary, serves the interests of all parties.

When the attorney files the complaint and supporting information to the government, the attorney should identify specific information that could result in the whistleblower’s loss of confidentiality. After that, the attorney can work with the government investigators to strategize ways to “back source” the information in a manner that does not reveal the source’s identity but permits the government to obtain the evidence from other witnesses or the company.

The way these agencies publish their award decisions demonstrates their commitment to the strict confidentiality required under the Dodd-Frank Act and implemented by the SEC and CFTC. They go out of their way to ensure that their reward decisions do not contain information that would “out” the whistleblower.

The decisions issued by the U.S. Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) reinforce this point. For example, on April 28, 2020, the SEC awarded a whistleblower approximately $18 million. In its published decision, the SEC took pains to include no information that could lead the public or an employer to figure out who the whistleblower is. The award ruling and: