Why be a whistleblower for the SEC?

Whistleblowers who report wrongdoing to the Securities and Exchange Commission (SEC) may receive a reward if government enforcement agencies recover more than $1 million as a result of the whistleblower’s information. SEC whistleblower lawyers at Phillips & Cohen can help individuals report wrongdoing confidentially and receive a reward.

SEC whistleblowers also are entitled to job protection.

Both US citizens and foreign nationals may file whistleblower claims and receive rewards.

Phillips & Cohen secured for one of its international clients an SEC award of $32 million for information and assistance that exposed and stopped a massive securities fraud. It is one of the largest SEC whistleblower rewards made under the Dodd-Frank program.

The Dodd-Frank Wall Street Reform and Protection Act, known as the Dodd-Frank Act, created the SEC whistleblower reward program (as well as the CFTC whistleblower reward program) in 2010.

The SEC whistleblower program has been very successful because it offers rewards, protection against job retaliation and confidentiality. SEC whistleblowers are responsible for enforcement actions that included more than $2.5 billion in monetary sanctions. Out of that total, $1.4 billion was for disgorgement of ill-gotten gains and interest and almost $750 million for harmed investors.

The SEC has awarded more than $523 million to 97 individuals since issuing its first award in 2012. As whistleblower awards have grown, so have the number of whistleblower submissions. The SEC receives thousands of whistleblower submissions every year.

The SEC whistleblower program – the main components

(For more information about the CFTC program, see our CFTC whistleblower award program page.)

  • Whistleblower rewards:

    Whistleblowers will receive a reward of 10 percent to 30 percent based on the amount the SEC collects as a result of the whistleblower’s information, if more than $1 million is collected. Once the SEC recovers more than $1 million, recoveries in related cases by other agencies also are counted toward the whistleblower award. The law says certain factors will be considered to determine the whistleblower’s reward:

    • The significance of the information provided.
    • The assistance provided by the whistleblower and the whistleblower’s attorney.
    • The “programmatic interest” of the SEC “in deterring violations of the securities law.”
SEC whistleblower awards – rewards analyzed by amount and percentage 2012-2020

Source: SEC

  • Job protection:

    The Dodd-Frank Act specifically states that employers may not fire, demote, suspend, threaten, harass, or discriminate against an individual who provides information to or assists the SEC. Whistleblowers who suffer from employment retaliation may sue for reinstatement, back pay and any other damages that occurred if they reported their allegations to the SEC before the retaliation happened.

  • Confidentiality:

    Whistleblowers may report fraud anonymously, as long as they have retained a lawyer to represent them. In some cases, their identities may remain unknown even to the SEC until the time comes for the payment of a reward. This is the strongest confidentially provision available out of any of the federal whistleblower programs, including “qui tam” cases under the False Claims Act and the Internal Revenue Service (IRS) whistleblower program. See “Can the SEC Be Trusted to Protect a Whistleblower’s Identity?” written by Phillips & Cohen partner Erika A. Kelton.

SEC Whistleblower Claims

SEC whistleblower claims that have been filed with the SEC include allegations of money laundering, accounting fraud, mispricing of stock and violations of the Foreign Corrupt Practices Act (FCPA).

Phillips & Cohen has won four SEC awards for its clients, including the $32 million award for an international whistleblower. We have extensive experience representing whistleblowers in cases involving complex financial transactions and other corporate fraud under the SEC whistleblower program as well as other government rewards programs. For instance, we represented the whistleblower who exposed yield-burning in the municipal bond market as well as a Wall Street banker who exposed fraudulent tax shelters involving more than $10 billion of taxable income.

If you are aware of any corporate fraud, securities violations or FCPA violations and would like to discuss your options under the SEC whistleblower or CFTC whistleblower programs, please contact Phillips & Cohen to discuss the matter at no charge.

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