Eligibility Report

Foreword

Being a whistleblower is not always easy, glamorous, or lucrative. For many individuals, the decision to break their silence and report possible misconduct—internally or externally—is one of the most significant and difficult decision they will ever have to make. As a result, it is critical to understand the rules, risks and rewards inherent in blowing the whistle. SEC Whistleblower Advocates was the first law firm in the country to exclusively focus its practice on protecting and advocating for SEC whistleblowers. We have an impressive track record of holding powerful companies accountable for securities violations. Our partners have represented numerous high-profile corporate whistleblowers and secured precedent-setting whistleblower awards. Led by a longtime veteran of federal law enforcement, Jordan Thomas, our firm leverages unparalleled SEC enforcement and whistleblower representation experience to protect and advocate for SEC whistleblowers. As a former Assistant Director and Assistant Chief Litigation Counsel in the Enforcement Division of the SEC, Jordan played a leadership role in the development of the SEC Whistleblower Program. He is joined by 4 former senior SEC prosecutors. Collectively, they have over 100 years of experience successfully prosecuting high-profile SEC enforcement actions. This report is designed to educate potential whistleblowers on the basic eligibility provisions of this important investor protection program. Please do not hesitate to contact us for more information or a free confidential consultation.

General Eligibility

Based upon your responses, you appear to meet the general eligibility requirements to participate in the SEC Whistleblower Program. Now, this report will examine your specific eligibility for each of the key components of the program—anonymous reporting, employment protections and monetary awards.

Based upon your responses, you do not appear to meet the general eligibility requirements to participate in the SEC Whistleblower Program.

The program is limited to whistleblowers who report a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur. See Rule 21F-2. If you are not sure whether certain conduct constitutes a securities violation, the Securities Law Primer and SEC Sanctions Database may be helpful.

Although the SEC encourages individuals to report possible securities violations within their organizations and externally to regulatory and law enforcement organizations, SEC whistleblowers are required to submit information to the agency in accordance with the program’s implementing rules. See Section 21F(c)(2)(D). Specifically, SEC whistleblowers must submit information about possible securities violations either through the agency’s online Tips, Complaints and Referrals portal or by mailing or faxing a hardcopy Form-TCR to the SEC Office of the Whistleblower. See Rule 21F-9.

An SEC whistleblower must declare under penalty of perjury that the information about possible securities violations they or their counsel provide to the agency is true and correct to the best of their knowledge or belief at the time of submission. See Rule 21F-9. Such a declaration is not required to provide information about possible securities violations through the SEC Tip, Complaint or Referral Portal.

An SEC whistleblower must be an individual. A company or another entity is not eligible to participate in the program. See Rule 21F-2. Entities, with potential liability, may be eligible for significant non-monetary incentives associated with the SEC Cooperation Program. Any individual or entity, regardless of potential liability, may anonymously provide information about possible securities violations through the SEC Tip, Complaint or Referral Portal.

Anonymous Reporting

If you have information about a possible securities violation, you may report it within your organization or externally. Virtually every organization has multiple options for reporting possible misconduct. And, the SEC Whistleblower Program offers significant incentives for whistleblowers to report violations internally. However, it is important to carefully weigh the risk of retaliation against the additional benefits associated with internal reporting. Since the best protection against retaliation is anonymity, many whistleblowers elect to report anonymously.

Based upon your responses, you appear to be eligible to anonymously report possible securities violations to the SEC.

Based upon your responses, you do not appear to be eligible to anonymously report possible securities violations to the SEC if you elect not to be represented by counsel when you make your whistleblower submission.

Even if you are technically eligible to report anonymously, the SEC may not be able to fully protect a whistleblower’s identity if it has already been disclosed to the agency. That being said, SEC investigations are confidential and non-public so the agency may only disclose your identity in very limited circumstances. See Rule 21F-7.

Employment Protections

Employers may not, directly or indirectly, discharge, demote, suspend, threaten, harass, or in any way discriminate against you for: i) providing information about possible securities violations to the SEC; ii) participating in any SEC investigation or related enforcement action; or iii) making disclosures to the SEC required by law. If a whistleblower is retaliated against in violation of the law, he or she may be entitled to reinstatement with equivalent seniority, two times back pay with interest, attorneys’ fees, and reimbursement of other related expenses.

Based upon your responses, you appear to be eligible for the employment protections associated with the SEC Whistleblower Program.

Based upon your responses, you do not appear to be eligible for the employment protections associated with the SEC Whistleblower Program.

An SEC whistleblower must have a reasonable belief that the information provided to the agency relates to a possible securities law violation that has occurred, is ongoing, or is about to occur. Accordingly, among other things, the whistleblower must have a subjectively genuine belief that the information demonstrates a possible violation. See Rule 21F-2.

An SEC whistleblower must have a reasonable belief that the information the employee is providing to the agency relates to a possible securities law violation that has occurred, is ongoing, or is about to occur. Accordingly, among other things, the whistleblower must have a good faith belief that a similarly situated employee might also reasonably possess. See Rule 21F-2.

A whistleblower may not be entitled to the employment protections associated with the SEC Whistleblower Program until he or she reports the information about a possible securities violation to the SEC in accordance with the rules of the program. See Rule 21F-2 and Section 21F(h)(1)(A). Currently, there is a split in the legal circuits regarding whether reporting internally is enough to qualify for the employment protections offered by the SEC Whistleblower Program. The SEC believes that it is. See Policy Statement. Nevertheless, if retaliation is anticipated, it may be prudent to formally and quickly report possible securities violations to the SEC. However, in any case, a whistleblower may still be eligible for other federal and state whistleblower protections.

Regardless of your ability to qualify for the employment protections associated with the SEC Whistleblower Program, you may be eligible for other federal and state whistleblower protections.

Monetary Awards

The SEC is required to pay eligible whistleblowers 10-30% of the monetary sanctions collected as a result of a successful SEC enforcement action in which the sanctions exceed $1 million. The monetary awards also extend to related enforcement actions brought by other law enforcement and regulatory organizations. Potential monetary awards can be significant. While every SEC enforcement action is unique, and prior sanctions do not guarantee future awards, by way of example, in each of the last two fiscal years, the SEC secured more than $4 billion in monetary sanctions. In several cases, sanctions exceeded $100 million. See SEC & DOJ Prosecutions.

Based upon your responses, you appear to be eligible to receive a monetary award associated with the SEC Whistleblower Program. Notwithstanding this fact, you are encouraged to independently and carefully explore all of your internal and external reporting options. Ultimately, if you decide to report a possible securities violation to the SEC, here are Five Insider Tips for SEC Whistleblowers.

Based upon your responses, you may not meet the eligibility requirements to receive a monetary award associated with the SEC Whistleblower Program.

Any individual who is convicted of a criminal violation that is related to information provided to the SEC about a possible securities violation for which the individual could otherwise receive an award is not eligible for a monetary award under the SEC Whistleblower Program. See Section 21F(c)(2) and Rule 21F-8. Individuals, with potential liability, may be eligible for significant non-monetary incentives associated with the SEC Cooperation Program—including criminal immunity.

Any individual who is the spouse, parent, child or sibling of a member or employee of the SEC or resides in the same household as a member or employee of the SEC is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-8.

Any individual who, at the time he or she acquired the information provided to the SEC, was a member, officer or employee of the Securities and Exchange Commission, Department of Justice, Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Public Accounting Oversight Board, Municipal Securities Rulemaking Board, national securities exchange, registered securities association, registered clearing agency, or law enforcement organization is not eligible for a monetary award under the SEC Whistleblower Program. See Section 21F(c)(2) and Rule 21F-8.

Any individual who, at the time he or she acquired the information provided to the SEC, was a member, officer or employee of a foreign government or any other foreign financial regulatory authority; or knowingly acquired the information about the possible securities violation from such a person is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-8.

SEC whistleblowers must voluntarily provide the SEC with information about possible securities violations. Accordingly, any individual who was required to provide such information as a result of a pre-existing legal duty or agreement with the SEC or another regulatory or law enforcement organization is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-4.

SEC whistleblowers must voluntarily provide the SEC with information about possible securities violations. Accordingly, any individual, who personally or through his or her representative, receives a request, inquiry or demand from the SEC, Public Company Accounting Oversight Board, self-regulatory organization, Congress, any other authority of the federal government, or a state Attorney General or securities regulatory authority that relates to the subject matter of the information provided to the SEC is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-4.

SEC whistleblowers must provide original information about possible securities violations. Accordingly, any individual who provides information already known to the SEC from any other source is not eligible for a monetary award under the SEC Whistleblower Program—unless the whistleblower was the original source of the information. See Rule 21F-4.

SEC whistleblowers must provide original information about possible securities violations. Accordingly, any individual who provides information exclusively derived from an allegation made in a judicial or administrative hearing, in a government report, hearing, audit or investigation, or from the news media is not eligible for a monetary award under the SEC Whistleblower Program—unless the whistleblower is the original source of the information. See Rule 21F-4.

SEC whistleblowers must provide information about a possible securities violation that leads to a successful SEC enforcement action. Accordingly, any individual who does not provide information that, in whole or in part, causes the SEC staff to commence an examination, open an investigation, re-open a closed investigation or to inquire concerning different conduct as part of a current examination or investigation, is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-4.

SEC whistleblowers must provide information about securities violations that leads to a successful enforcement action in which the SEC obtains monetary sanctions totaling more than $1,000,000 in order to be eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-3. This minimum threshold may be met with any money, including penalties, disgorgement, and interest ordered to be paid and any money deposited into a disgorgement fund or other similar fund as a result of one or more judicial or administrative proceedings brought by the SEC that arise out of the same nucleus of operative facts. See Rule 21F-4. There are many factors that may cause the monetary sanctions in an SEC enforcement action to exceed $1,000,000 including: whether the subject matter of the action is an SEC priority; whether the misconduct involves regulated entities or fiduciaries; the type and severity of the securities violations; the age and duration of misconduct; the number of violations; the isolated, repetitive, or ongoing nature of the violations; the amount of harm or potential harm caused by the violations; and the number of individuals or entities harmed. Potential SEC whistleblowers may search Labaton Sucharow’s SEC Sanctions Database for comparable cases in which the monetary sanctions exceeded $1,000,000.

Although attorneys and employees of a law firm are eligible to participate in the SEC Whistleblower Program, their ability to receive monetary awards is limited. Specifically, the SEC implementing rules prohibit attorneys from using information obtained through a communication protected by the attorney-client privilege or through the representation of a client, unless the attorney client privilege has been waived, or if disclosure of the otherwise confidential information is permitted either by SEC Rule 205.3 or by the applicable state attorney conduct rules. See Rule 21F-4. To learn more about attorney eligibility, please read an article in Corporate Counsel entitled “Balancing Conscience and Confidentiality for Attorney Whistleblowers ” co-authored by Jordan Thomas and Professor Bruce Green of Fordham University’s School of Law.

Although accountants and auditors are eligible to participate in the SEC Whistleblower Program, their ability to receive monetary awards is limited. See Rules 21F-4 and 21F-8. To learn more about accountant and auditor eligibility, please read an article in the CPA Journal entitled “The Three R’s of Reporting Fraud: Responsibilities, Rights, and Risks for Accountants after Dodd-Frank” co-authored by Jordan Thomas and Professor Eileen Z. Taylor.

Although officers, directors, trustees and partners of an entity involved with possible securities violations are eligible to participate in the SEC Whistleblower Program, their ability to receive a monetary award is limited. Specifically, the SEC implementing rules only authorize these individuals to receive a monetary award if they have a reasonable basis to believe: (i) the disclosure is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the entity or investors; (ii) the relevant entity’s conduct will impede an investigation of the misconduct; or (iii) the individual reported the information to the relevant entity’s audit committee, chief legal or compliance officer, or his or her supervisor, or the officer received the information under circumstances that indicated that they were already aware of it, and more than 120 days has elapsed. See Rule 21F-4. To learn more about officer, director, trustee, and partner eligibility, please read an article in Risk Management Magazine entitled “When Can An Officer Blow the Whistle?”co-authored by Jordan Thomas and Professor Lawrence A. Hamermesh.

Although employees or contractors whose duties involve compliance or internal audits are eligible to participate in the SEC Whistleblower Program, their ability to receive a monetary award is limited. Specifically, the SEC implementing rules only authorize these individuals to receive a monetary award if they have a reasonable basis to believe: (i) the disclosure is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the entity or investors; (ii) the relevant entity’s conduct will impede an investigation of the misconduct; or (iii) the individual reported the information to the relevant entity’s audit committee, chief legal or compliance officer, or his or her supervisor, or the individual received the information under circumstances that indicated that they were already aware of it, and more than 120 days has elapsed. See Rule 21F-4.

Although individuals retained to conduct an internal investigation of possible securities violations are eligible to participate in the SEC Whistleblower Program, their ability to receive a monetary award is limited. Specifically, the SEC implementing rules only authorize these individuals to receive a monetary award if they have a reasonable basis to believe: (i) the disclosure is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the entity or investors; (ii) the relevant entity’s conduct will impede an investigation of the misconduct; or (iii) the individual reported the information to the relevant entity’s audit committee, chief legal or compliance officer, or his or her supervisor, or the individual received the information under circumstances that indicated that they were already aware of it, and more than 120 days has elapsed. See Rule 21F-4.

Any individual who acquires information about a possible securities violation from an individual that is ineligible to receive a monetary award and provides it to the SEC with the intent to evade any provision of the implementing rules is unlikely to be eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-8.

Any individual who, in connection with an SEC action or another authority’s related enforcement action, knowingly and willfully makes any false, fictitious or fraudulent statement or representation, or uses any false writing or document knowing that it contains any false, fictitious, or fraudulent statement or entry with intent to mislead or otherwise hinder related law enforcement or regulatory activities is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-8.

Any individual who has already been granted or denied an award under the whistleblower award program of the Commodity Futures Trading Commission (CFTC) for the same misconduct is not eligible for a monetary award under the SEC Whistleblower Program. See Rule 21F-3. Accordingly, in cases where SEC and CFTC violations could be reported, SEC whistleblowers should very carefully consider whether and how to report possible violations to the CFTC.

Regardless of whether an individual qualifies for a monetary award associated with the SEC Whistleblower Program, a whistleblower may be eligible for other federal and state whistleblower awards.

Conclusion

While your responses to this questionnaire may suggest that you do not meet the general eligibility requirements of the SEC Whistleblower Program, we strongly encourage potential whistleblowers to independently confirm the conclusions of this assessment and to carefully explore all internal and external reporting options. In the end, the importance of individuals coming forward to report misconduct, even if done anonymously, cannot be overstated. You can provide your organization or law enforcement authorities with early and invaluable assistance in identifying the scope, participants, victims and ill-gotten gains associated with possible securities violations. With your help, securities violations will be detected and stopped earlier. Investors will be protected and your organization’s reputation will be preserved.

We hope that the information provided in this report is helpful to you. We applaud you for having the courage to consider reporting possible misconduct and to take a stand against corporate wrongdoing. The importance of individuals coming forward to report misconduct, even if done anonymously, cannot be overstated. You can provide your organization or law enforcement authorities with early and invaluable assistance in identifying the scope, participants, victims and ill-gotten gains associated with possible securities violations. With your help, securities violations will be detected and stopped earlier. Investors will be protected and your organization’s reputation will be preserved. Although the difficult decision about whether, how, and when to blow the whistle ultimately must be made by you, we are committed to marshaling every available resource to help our clients make this important decision. For more information about the SEC Whistleblower Program or to request a case evaluation, you may contact our Whistleblower Representation Team in any number of ways—by telephone, email, or electronic submission through this website. All initial consultations and case evaluations are free, confidential and protected by the attorney-client privilege. In addition, in making an initial consultation, individuals do not need to provide personal identifying information or the names of possible securities violators. For international whistleblowers, language translation services are available upon request.

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