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What is the Process of an SEC Whistleblower Award?

June 17th, 2019
whistleblower retaliation

When Congress created the SEC Whistleblower Program in 2010, its provisions encouraged whistleblowers to reveal violations of federal securities law by allowing them to claim up to 30 percent of any monetary sanctions collected by SEC actions. If millions of dollars are collected, the whistleblower is set up financially for life. To collect this windfall, however, the whistleblower must meet SEC standards. The company is not permitted to retaliate against the whistleblower, and the SEC does not reveal the whistleblower’s name to the public without permission.

Eligible Whistleblowers

Eligible whistleblowers are individuals, not companies or organizations, who voluntarily provide the SEC with information about potential securities law violations that have occurred, are ongoing, or will soon occur. If the information given to the SEC leads to a successful action where monetary sanction is at least $1 million, the whistleblower is eligible for 10 to 30 percent of the collected funds. The SEC does not require that the whistleblower is an employee of the company they are submitting information for.

Federal Securities Law Violations

There are many types of federal securities law violations, and the SEC frequently puts forth new regulations. The most common types of SEC violations reported by whistleblowers include:

  • Insider trading
  • Accounting and other fraud
  • Bribing foreign officials
  • Material misstatements to investors

The SEC Investigation

After receiving the tip, the SEC performs an analysis. If the analysis shows the tip could prove fruitful, it undertakes an investigation. Depending on the results of the investigation, the SEC may file an enforcement action. Should the enforcement action succeed, penalties will follow.

The SEC posts all information on its website under Notice of Covered Action when penalties are greater than $1 million. The whistleblower or their attorney should visit the SEC website often to see if any of these actions pertained to the tip. If so, the whistleblower can file a claim with the SEC for a portion of the money collected.

While the SEC determines what portion of the collected funds the whistleblower will receive, the percentage depends on the overall significance of the tip, whether the whistleblower participated in the violations, how much assistance the whistleblower provided during the investigation, and how long it took the whistleblower to report the violation to the SEC after learning of it. SEC resources are limited, so they will only go after the biggest cases and where the information provided is very strong.

Delaware County Employment Lawyers at Sidney L. Gold & Associates, P.C. Protect Whistleblowers from Discrimination and Retaliation

If you experienced discrimination or retaliation in the workplace by an employer for exercising your rights under whistleblower protections, you need the services of the experienced Delaware County employment lawyers at Sidney L. Gold & Associates, P.C. For a free consultation, contact us online or call us at 215-569-1999 today. Located in Philadelphia and Pennsauken, New Jersey, we help clients throughout Bucks County, Delaware County, Chester County, Montgomery County, and South Jersey.

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