Working closely with the SEC Office of the Whistleblower, the SEC whistleblower attorneys at Kohn, Kohn & Colapinto helped write and modernize whistleblower rules so those who report securities fraud may be entitled to receive monetary awards.

The SEC Office of the Whistleblower confirmed in 2020 that whistleblowers were responsible for over $2.5 billion in sanctions ordered to be paid by fraudsters and $750 million returned to harmed investors. It was the SEC fraud lawyers at Kohn, Kohn & Colapinto who helped write and submit numerous Dodd-Frank Act whistleblower rule amendments that would continue incentivizing whistleblowers to report fraud under the SEC whistleblower reward program.

For over three decades, the securities fraud lawyers at Kohn, Kohn & Colapinto have represented corporate whistleblowers who courageously report violations of the Dodd-Frank Act. In 2018, the firm represented two high-profile whistleblowers who provided the SEC with detailed information concerning their company’s alleged violations. Through expert litigation, our law firm helped these clients win one of the largest awards ever paid by the SEC ($83 million).

If you’re looking for an experienced SEC whistleblower attorney, look no further than Kohn, Kohn & Colapinto. Our experienced lawyers will be able to walk you through the process of blowing the whistle, and maximize the likelihood that you remain anonymous. Get in touch with one of our experienced whistleblower attorney’s today for a confidential case review.

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How the SEC Whistleblower Program Works

Whistleblower Rules Update [2020]

On September 23, 2020 the U.S. Securities and Exchange Commission, in a 3-2 vote, approved new rules for its highly successful Dodd-Frank Act whistleblower program. 

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The SEC Whistleblower Program was created to provide monetary incentives for people to come forward with violations of federal securities laws. Those who report securities fraud are entitled to an award of 10%-30% of the monetary sanctions collected in legal actions brought by the SEC and other authoritative parties. Furthermore, the program absolutely prohibits employer retaliation as a direct result of a whistleblower coming forward with sensitive information.

How an SEC award Amount is Determined

The rules require that the SEC consider many factors when determining the amount, which vary from case to case. The SEC may increase the percentage based on the following factors:

  • The significance of the information you provided to the success of any proceeding brought against those committing securities fraud.
  • The extent of the assistance you provide us in the SEC’s investigation and any successful legal proceeding.
  • The SEC’s enforcement interest in deterring violations of the securities laws by making awards to whistleblowers who provide information that leads to the successful enforcement of these laws. 
  • Whether you participated in your company’s internal compliance systems, such as, reporting the possible securities violations through internal whistleblower, legal or compliance procedures before, or at the same time, you reported them to the SEC.

The SEC may reduce the amount of an award based on these factors, if you:

  • Were a participant in the securities law violation(s) you reported.
  • Unreasonably delayed reporting the violation(s) to the SEC.
  • Interfered with your company’s internal compliance and reporting systems.
  • Make false statements to your compliance department that hindered its efforts to investigate possible wrongdoing.

Given the long history of retaliation against internal whistleblowers, and the opportunity to obtain an award if you contact the appropriate government agency, no employee should ever report an allegation of fraud or corruption internally until he or she has contacted an SEC whistleblower attorney and obtained advice. Furthermore, if an internal compliance program is managed by company attorneys, that program should be avoided.

Qualifying as an SEC Whistleblower

Almost any individual (or multiple individuals) who reports securities violations to the Commission can become eligible for monetary awards from the SEC Whistleblower Program. Both U.S. citizens and foreign nationals, within or outside of an organization, can be an SEC whistleblower. However, companies cannot qualify as whistleblowers.

Eligible whistleblowers are those who voluntarily provide the SEC with original information of potential violations of the federal securities laws. The information must lead to a successful SEC enforcement action, in an order of monetary sanctions greater than $1 million.

If you’re aware of violations of federal securities laws, please contact one of our SEC whistleblower attorneys today for a confidential case review.

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Reporting Securities Fraud

The SEC Office of the Whistleblower conducts thorough investigations of possible violations of federal securities laws. When submitting a tip, whistleblowers must hire a whistleblower lawyer to help prepare and file a TCR (“Tip, Complaint, and Referral”) form. This TCR will include information, such as the individuals involved in a particular scheme, and provide detailed examples of how the fraud works. Some examples of the kind of conduct the SEC is interested in include:

  • Ponzi scheme, Pyramid Scheme, or a High-Yield Investment Program
  • Theft or misappropriation of funds or securities
  • Manipulation of a security’s price or volume
  • Insider trading
  • Fraudulent or unregistered securities offering
  • False or misleading statements about a company (including false or misleading SEC reports or financial statements)
  • Abusive naked short selling
  • Bribery of, or improper payments to, foreign officials
  • Fraudulent conduct associated with municipal securities transactions or public pension plans
  • Other fraudulent conduct involving securities

The information you provide must agree with the “led to” guidelines in order for your case to be investigated, re-opened or in pursuant of a new line of investigation in connection with an ongoing federal investigation.

What Happens if You Face Retaliation for Reporting SEC Fraud

It is absolutely prohibited and against the law for an employer to retaliate against you for reporting a violation of federal securities laws. Retaliation may include suspension, demotion, reduction in salary, or any other disciplinary action. If you believe you’ve been retaliated against by your employer, you may report your concerns to a SEC whistleblower lawyer, who may be able to bring an enforcement action against the company on behalf of the Securities Exchange Commission. Furthermore, under the Sarbanes-Oxley Act (SOX), you may be entitled to file a complaint with the U.S. Department of Labor if you are retaliated against for reporting possible securities law violations. For more details on filing whistleblower complaints under the Sarbanes-Oxley Act, please visit the Department of Labor’s whistleblower website.

Report Concerns Internally or to a Corporate Compliance Program

The best way to prevent retaliation is for your company not to know who you are. If they do not know who the whistleblower is, it is hard to retaliate. You should not make any disclosures to your supervisor or company compliance office until after you consult a whistleblower attorney. There is a well-established history of employees suffering retaliation after disclosing internally.

To protect your identity and confidentiality, do not use any devices owned by the company or the government to blow the whistle. For example, do not use a company or government-issued technology, including phones, computers, or wireless networks. The U.S. Supreme Court permits highly intrusive surveillance through corporate-owned property regardless if that property is given an employee to use in a personal capacity.

What Happens to The Tip Once It’s Received by the SEC?

All tips, complaints and referrals received by the SEC are fully reviewed by their Enforcement staff. During the evaluation process, the Office of Market Intelligence (“OMI”) staff examines each tip to identify those with high-quality information that warrant the additional allocation of SEC resources. When OMI determines a complaint warrants deeper investigation, OMI staff assigns the complaint to one of the SEC’s eleven regional offices, a specialty unit, or to an Enforcement group in the Home Office. Complaints that relate to an existing investigation are forwarded to the staff working on the matter. Tips that could benefit from the specific expertise of another Division or Office within the SEC generally are forwarded to staff in that Division or Office for further analysis.

The SEC may use information from whistleblower tips and complaints in several different ways. For example, the SEC may initiate an enforcement investigation based on the whistleblower’s tip. A whistleblower tip may also prompt the SEC to commence an examination of a regulated entity or a review of securities filings, which may lead to an enforcement action. Even if the tip does not cause an investigation to be opened, it may still help lead to a successful enforcement action if the whistleblower provides additional information that significantly contributes to an ongoing or active investigation.

The SEC conducts its investigations on a confidential basis as a matter of policy. The purpose of this policy is to protect the integrity of any investigation from premature disclosure and to protect the privacy of persons involved in investigations. The SEC generally does not comment on whether it has opened an investigation in a particular matter or the status of its investigations. While this can be frustrating, it is necessary to protect the integrity of the investigative process.

How do I know whether or not my information resulted in the SEC taking an enforcement action against the company or persons I reported?

Based on the status of a case, the whistleblower or the whistleblower’s attorney will know the status of an investigation. However, every month, the SEC Whistleblower Program publishes a list of Notices of Covered Action. In cases where a company or individual was sanctioned over $1 million, qualified whistleblowers can receive monetary rewards. Check the list monthly to see if you are qualified for a whistleblower reward.

Fees for Hiring an SEC Whistleblower Attorney

Many whistleblower attorneys work for a “contingency” fee. The client does not have to pay any advance attorney fees. If the whistleblower loses his or her case, they do not owe the attorney any money. A typical contingency fee for an SEC whistleblower attorney is between 30-40% of the amount awarded. Learn more about how we work on contingency and view our current rates.

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