Whistleblower Confidentiality

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Whistleblower Confidentiality2020-07-09T00:42:13+00:00

One of the most important breakthrough in whistleblower law has been the ability of whistleblowers to report frauds confidentially and obtain whistleblower rewards. Simply stated, if a company does not know who the whistleblower is, they cannot retaliate against someone they do not know exists.

The major laws protecting confidentiality are:

  • Foreign Corrupt Practices Act
    Permits whistleblowers to anonymously and confidentially file a reward claim.
  • Securities and Exchange Act (Dodd-Frank Act whistleblower provision)
    Permits whistleblowers to anonymously and confidentially file a reward claim.
  • Commodity Exchange Act (Dodd-Frank Act whistleblower provision)
    Permits whistleblowers to anonymously and confidentially file a reward claim.
  • IRS Whistleblower Law for Tax Evasion, Tax Underpayments, Illegal Offshore Banking and Money Laundering
    Although the law does not permit anonymous filings, the IRS regulations require that the IRS provide whistleblowers with the maximum amount of confidentiality permitted under law when they file a reward claim. In practice this provision provides extremely effective confidentiality protections.
  • Inspector General Act/Whistleblower Protection Act
    These two laws governing the rights of federal employees permit federal workers to file confidential whistleblower disclosures regarding wrongdoing.
  • False Claims Act/qui tam
    The False Claims Act requires that the original lawsuit filed by a whistleblower alleging violations of the False Claims Act be filed under “seal.” This means that the original complaint is not a pubic document and is not served on the defendant. The complaint is provided to the United States government in order to permit the government to conduct an investigation. Once the investigation is completed the complaint often comes out of seal, and is placed on the public record. The False Claims Act’s reward law does not provide the same level of confidentiality as do other whistleblower reward laws, but the ability to keep the complaint confidential during the government’s investigation (which can take years) is extremely helpful in preventing retaliation.
  • Nondisclosure Agreements
    Many companies require employees to sign nondisclosure agreements that require employees to notify their bosses if they communicate with the government. These agreements interfere with an employee’s right to confidentiality. The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, along with other federal agencies, have determined that these types of agreements are illegal and in violation of the SEC whistleblower reward law, the CFTC whistleblower reward law and the FCPA whistleblower reward law. These types of agreements also violate the federal Obstruction of Justice laws. However, prior to violating a nondisclosure agreement a whistleblower should contact a whistleblower attorney with expertise on nondisclosure agreements in order to ensure that your confidential disclosures to federal law enforcement are protected.

Frequently Asked Questions

Are there any circumstances where the SEC must reveal the identity of a whistleblower or information that could lead to the revelation of a whistleblower’s identity?2020-06-02T02:12:42+00:00

Yes, under very limited circumstances. The U.S. Constitution may require that a defendant be provided access to information provided to the SEC by an anonymous whistleblower in a criminal proceeding. Additionally, the SEC may provide whistleblower-information to other regulatory law enforcement authorities when “the Commission determines that it is necessary to accomplish the purposes of the Exchange Act” and to “protect investors.” In such cases, which rarely happens, the SEC’s rule states that “it may provide [whistleblower] information to the Department of Justice, an appropriate regulatory authority, a self-regulatory organization, a state attorney general in connection with a criminal investigation, any appropriate state regulatory authority, the Public Company Accounting Oversight Board, or foreign securities and law enforcement authorities.” All of the U.S. authorities identified above must adhere to the same confidentiality requirements as does the SEC. In regard to foreign securities or law enforcement authorities, the SEC must “determine what assurances of confidentiality it deems appropriate” in order to protect the whistleblower when providing information to foreign authorities. in providing such information to foreign securities and law enforcement authorities.

Will the SEC pay an award to an anonymous whistleblower?2020-06-02T02:12:08+00:00

Yes. However, if the anonymous whistleblower wants to apply for a reward he or she must inform the SEC as to his or her identity. The SEC will strictly maintain the identity of the anonymous whistleblower, but needs to know who will receive the reward payment. The SEC must insure that the whistleblower applying for the award is not a disqualified person, such as an employee of the SEC.

How does filing an anonymous complaint work?2020-06-02T02:11:23+00:00

The anonymous whistleblower is required to hire a licensed U.S. attorney. The whistleblower lawyer acts as the intermediary between the whistleblower and the SEC, and can play a key role in ensuring that the whistleblower’s information if understood by the government and can be used for the investigation. It is very important that a whistleblower retains an experienced qui tam attorney or expert whistleblower lawyer to represent him or her as an anonymous whistleblower. There are very specific rules that must be followed in order to be an anonymous SEC whistleblower.

Can a whistleblower file an anonymous complaint with the SEC?2020-06-02T02:10:56+00:00

Yes, the Dodd-Frank Act has a special provision that permits whistleblowers to file their TCR complaint anonymously and qualify for a whistleblower reward.

Does the U.S. Securities and Exchange Commission (“SEC”) protect the confidentiality rights of whistleblowers?2020-06-02T02:10:19+00:00

Yes. It is the official policy of the SEC to treat all “tips” or whistleblower complaints as “confidential and non-pubic.” If a whistleblower files their information under to the Dodd-Frank Act whistleblower law, and provides the information using the official “Tips, Complaints and Referrals” form (known as a TCR), additional confidentiality protections may be applicable.

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