It’s probably one of the most successful public-private partnerships in US history – and not just because the leader of our practice was a principal architect of the program.
In July 2010, the SEC Whistleblower Program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. This innovative program offers eligible whistleblowers significant monetary awards, employment protections and the ability to report possible securities violations anonymously. The Founding Partner of SEC Whistleblower Advocates, Jordan Thomas, had a leadership role in the development of the SEC Whistleblower Program, including assessing the viability of such a program, lobbying the Commission and Congress, and drafting the proposed legislation and implementing rules. Further information about the SEC Whistleblower Program can be found here.
Almost anyone. Indeed, with few exclusions or qualifications, any individual or group of individuals, regardless of citizenship, can be an SEC whistleblower. In fact, a whistleblower doesn’t have to be employed by the entity at issue. For example, Reuters profiled two of our analyst clients, who successfully reported securities violations at Orthofix. To be eligible for a monetary award, whistleblowers must voluntarily provide the SEC with original information about a possible violation of the federal securities laws. Companies and organizations cannot be SEC whistleblowers.
If you believe you can qualify to receive an SEC whistleblower award, read more about whistleblower eligibility and check out our eligibility calculator!
An SEC whistleblower may report any violation of the federal securities laws that has occurred, is ongoing, or is about to occur. The reported misconduct may occur anywhere in the world. In most cases, SEC enforcement actions involve manipulative and deceptive practices associated with the purchase or sale of a security. Beyond stocks and bonds, the federal securities laws have interpreted “security” broadly to include investment contracts, notes and other non-traditional investments.
There is no ceiling for an SEC whistleblower award. The amount of an award is determined by the monetary sanctions levied against the defendant company. Under the law, eligible whistleblowers are entitled to 10-30% of the monetary sanctions collected by the SEC in a successful enforcement action where the sanctions exceed $1 million. At SEC Whistleblower Advocates, many of our clients have earned multimillion dollar awards for their contributions to SEC enforcement actions.
Example: Jane Doe provided original information about a foreign bribery scheme that led to an enforcement action in which the SEC collected a $50 million penalty from ABC Company. As an eligible whistleblower, Jane is entitled to an award between $5 million - $15 million.
Importantly, whistleblowers may also be eligible for additional bounties derived from monetary sanctions collected in related proceedings by other law enforcement and regulatory organizations.
Example: In a separate criminal proceeding initiated by Jane Doe’s information, the Department of Justice fined ABC Company an additional $25 million. Jane would be entitled to an additional $2.5 million - $7.5 million.
To provide a sense of how significant SEC enforcement actions can be, in some years, the SEC secures more than $4 billion in monetary sanctions, with a number of individual actions exceeding $100 million. For example, some of our clients tipped the SEC about securities violations at Merrill Lynch and that enforcement action resulted in a staggering $415 million in sanctions.
To qualify for an award, SEC whistleblowers and their legal counsel are required to submit information regarding possible securities law violations online through the SEC’s Tip, Complaint or Referral Portal or by mailing or faxing an SEC Form TCR to the SEC Office of the Whistleblower. While this procedural requirement is relatively simple, due to the SEC’s limited resources and the high-volume of tips it receives, successful SEC whistleblowers often file sophisticated and detailed submissions. On behalf of SEC whistleblowers, our firm regularly files 100 page legal and factual whistleblower submissions with supporting exhibits.
Each year, the SEC Whistleblower Program receives more than 20,000 tips, complaints, and referrals. At any one time, the SEC actively conducts about 2,000 investigations. Given this tremendous investigative workload, only the very best SEC Whistleblower Program tips will ever be investigated.
Initially, all SEC Whistleblower Program tips are reviewed by the Office of Market Intelligence for apparent reliability, detail, and potential violations of the federal securities laws. The attorneys, accountants, and analysts in that office determine whether each tip should be assessed by experts in another division, given to an investigative team, or referred to another law enforcement or regulatory organization. The most promising tips are assigned to investigative staff in the Enforcement Division, who conduct a more detailed review and determine whether the alleged misconduct warrants a formal investigation. Even if the tip doesn’t lead to the opening of an examination or investigation, the information SEC whistleblowers provide to the Commission is retained and may be relied upon in the future if new evidence is discovered.
At SEC Whistleblower Advocates, 100% of our clients’ submissions are consistently forwarded to investigative teams within the Enforcement Division.
We can’t say it enough: Timing matters. The early bird really does get the worm. Similar to other bounty programs, the SEC Whistleblower Program was designed to encourage prompt reporting by rewarding whistleblowers who report “original information.” To that end, only the first whistleblower to report a securities violation will be eligible to receive an SEC Whistleblower Program award, unless subsequent whistleblowers are found to have significantly contributed to the success of the enforcement action. Even in cases where this higher standard is met, the Commission regularly reduces monetary awards to SEC whistleblowers for unreasonable delay in reporting.
SEC whistleblowers can report possible securities violations regardless of when they occurred. In practice, however, it is rare for the SEC to investigate misconduct that is more than five years old. Evidence tends to dissipate over time, and the applicable statute of limitations prevents the Commission from bringing an enforcement action seeking civil penalties.
While the number of SEC Whistleblower Program tips investigated each year is not disclosed, the Commission initiates approximately 1,000 new investigations each year —from all sources. Only a fraction of these will lead to successful SEC enforcement actions. An even smaller percentage of those enforcement actions will result in monetary sanctions in excess of the $1 million threshold required for a monetary award under the SEC Whistleblower Program. For prospective SEC whistleblowers, this means that the quality of their whistleblower submissions to the SEC is critically important.
Longer than you might think. Typically, SEC investigations take two to four years to complete. Factors that may influence the speed in which an SEC investigation is completed include: whether the reported wrongdoing involves an ongoing violation or poses a threat of imminent harm to investors; whether the entities and individuals being investigated voluntarily cooperate; the number of SEC staffers assigned to the case; the volume of evidence that the SEC Staff must collect and review; whether international locations and witnesses are involved; and whether the investigation requires coordination with other law enforcement and regulatory authorities. To learn more about the SEC’s enforcement and investigative process, please explore our SEC Insider’s Guide.
Know the odds. The SEC receives more than 20,000 tips, complaints, and referrals each year. At any one time, the SEC can only actively investigate about 2,000 cases. Each year, the SEC announces approximately 800 successful enforcement actions, and not all of them involve monetary sanctions above $1 million.
As a result, our law firm is ultra-selective in the cases that we accept. On average, we have only accepted 10 SEC Whistleblower Program cases per year.
After an enforcement action is announced where the monetary sanctions exceed $1 million, the SEC will post a Notice of Covered Action on its website. Within 90 calendar days of the notice date, SEC whistleblowers are required to mail or fax a completed application for an award, SEC Form WB-APP, to the SEC Office of the Whistleblower. As a courtesy, the SEC Staff often notifies known SEC whistleblowers or their legal counsel about the successful enforcement action and the opportunity to apply for an award. That being said, SEC whistleblowers are solely responsible for monitoring the SEC’s Notices of Covered Actions, so they don’t miss the award application deadline. On behalf of our clients, due to the high-stakes involved, SEC Whistleblower Advocates regularly monitors these notices and files lengthy and substantive applications for awards that address the governing law and highlight their many significant contributions during the SEC investigation and any related prosecution.
Yes. To avoid this relatively common phenomenon, we closely analyze the SEC’s denial orders. The most common reasons for denial, in order of frequency, are: the information didn’t lead to a successful enforcement action; the information was not “original” within the meaning of the program rules; and the award application was not filed within the required 90-day period.
In exercising its discretion to determine the award for SEC whistleblowers, between the statutory range of 10-30% of the monetary sanctions collected, the Commission will consider a variety of factors. Certain criteria may increase an award, such as the significance of the information provided by the whistleblower, the assistance provided by the whistleblower, the law enforcement interest in making an award and the participation of the whistleblower in internal reporting systems. Other factors may decrease an award, such as the culpability of the whistleblower, unreasonable reporting delay, and interference with internal compliance and reporting systems.
It depends on the case. Typically, after the SEC posts the Notice of Eligibility, it takes 2-3 years for SEC whistleblowers to receive their monetary award. To expedite the process, the SEC Office of the Whistleblower has hired several additional staff members and implemented new procedures. Once the current backlog has been addressed, we expect the standard wait time for SEC whistleblowers will be reduced. Factors that may influence the speed in which whistleblower payments are made include: the nature and size of the related enforcement action, whether there are other award applicants and whether one or more applicants appeal the Commission’s award determination.
The SEC has been given broad discretion to make determinations of whether, to whom, and in what amounts to make SEC Whistleblower Program awards. As a general rule, if an SEC whistleblower is denied an award it can appeal the Commission’s determination to the United States Court of Appeals for the District of Columbia Circuit or to a local federal appeals court, but the whistleblower cannot appeal the amount of award granted. Appeals must be filed within 30 days of the SEC’s adverse decision being issued.
We've had the pleasure of serving—for decades—in senior positions at the SEC and DOJ during both Republican and Democratic administrations. In our experience, unlike financial regulation, white collar law enforcement has been a bipartisan priority for most administrations. Given the program’s early success, long-term potential and relatively low operational cost, we expect that the SEC Whistleblower Program will remain substantially unchanged. In any case, we will closely follow these developments and will publicly advocate for the rights of SEC whistleblowers during future legislative and regulatory debates.
Absolutely. In fact, the ability to report possible misconduct anonymously is one of the most important pillars of the SEC Whistleblower Program. To do so, a whistleblower must be represented by an attorney.
Since our clients tend to be senior executives with a lot to lose and the best protection against retaliation and blacklisting is anonymous reporting, the majority of our clients file their SEC whistleblower submissions anonymously. Leveraging our decades of SEC and DOJ enforcement experience, we take extra measures to further protect our clients’ anonymity, including carefully considering where to file their whistleblower submissions and what supporting information and materials to provide the SEC. We also use sophisticated investigative reporting techniques to facilitate our clients’ anonymous communications with SEC Staff during the Commission’s investigation and any related litigations to enhance the probability of success and the size of future monetary awards.
Under the SEC Whistleblower Program, whistleblowers may report possible securities violations that have occurred, are ongoing, or are about to occur—even if ultimately mistaken or the concerns cannot be corroborated.
At SEC Whistleblower Advocates, on behalf of our SEC Whistleblower Program clients, we call upon vast SEC enforcement knowledge and investigative experience to confirm the existence of securities violations, determine the significance of those violations and leverage our proprietary resources to advise potential SEC whistleblowers. We have also made some of these resources available on this website.
No. SEC whistleblowers are incentivized, rather than required, to internally report possible securities violations. Under the SEC Whistleblower Program, potential whistleblowers are deemed to be in the best position to determine whether internal reporting would be safe and effective. For whistleblowers that report internally, the Commission offers larger SEC Whistleblower Program awards and other procedural benefits.
That said, while many organizations have effective compliance programs, not all companies and not all internal reporting systems are created equally. It may be beneficial to consult with an SEC Whistleblower attorney to discuss if, when and how to internally report possible securities violations.
Yes. As a general rule, agreements that restrict or discourage SEC whistleblowers from reporting possible securities violations are unenforceable and may constitute a violation of law. In recent years, using a variety of employment, severance and settlement agreements, companies have become more aggressive in their efforts to discourage employees from reporting violations to law enforcement and regulatory authorities. Deeply troubled by these practices, we partnered to lead a large coalition of public interest organizations to petition the SEC to use its tremendous power to stop these bad actors. As a result, the SEC has recently brought several high-profile enforcement actions against companies that use these illegal secrecy agreements, including the landmark $415 million case against Merrill Lynch originated by a group of our whistleblowers.
Yes. The employment status of whistleblowers is not important, only whether an individual has original information about possible securities violations. While being an eyewitness or having evidence of a securities violation is ideal, it is not required to participate in the program. For example, we represented financial analysts who reported accounting fraud at a publicly traded company, Orthofix. The company was forced to restate its financials and pay a significant monetary sanction to the SEC.
Under the SEC Whistleblower Program, one or more individuals are permitted to jointly file a whistleblower submission. Over the years, we have represented several groups of SEC whistleblowers, most notably, the group of whistleblowers responsible for the recent $415 million case against Merrill Lynch.
Powerful ones. When the handful of SEC officials—including our partner Jordan Thomas—set about drafting the key provisions of the SEC Whistleblower Program, they knew that meaningful employment protections were necessary for the long-term success of the program.
The resulting law is clear: An employer cannot discharge, demote, suspend, threaten, harass or discriminate against whistleblowers who report possible securities violations. These protections exist regardless of whether or not the reported securities violations are proven, as long as the SEC whistleblowers reported in good faith. Importantly, the SEC has made it clear that it will use its new authority to take action against employers that retaliate against SEC whistleblowers. We have seen this first-hand representing the first SEC whistleblower whose company, Paradigm Capital Management, was charged by the SEC with unlawful retaliation. Reporting possible securities violations internally only may not be considered a protected activity so it would be wise for whistleblowers to simultaneously report possible violations to their company and the SEC.
That’s a good, brave step.
The truth is, it’s not uncommon that individuals with the greatest ability to help law enforcement have some potential liability. With this in mind, the SEC Whistleblower Program allows for whistleblowers with potential culpability to report securities violations. In fact, only individuals who have been criminally convicted of related wrongdoing are barred from receiving an SEC whistleblower award. All other less culpable whistleblowers may receive an award, but it will be reduced based upon their level of culpability. For instance, individuals who initially were unaware that they were assisting others in committing securities violations or were pressured by their superiors to engage in the violations may be eligible to participate in the program.
Due to our extensive SEC and DOJ prosecutorial experience, we regularly advise potential SEC whistleblowers with potential criminal or civil liability. And, in keeping with our firm’s ‘history of firsts,’ we are proud to have represented the first SEC whistleblower to receive criminal immunity (and a substantial whistleblower award).
Citizenship is not a factor; foreign nationals are encouraged and regularly participate in the SEC Whistleblower Program. In fact, whistleblowers from more than 100 countries have submitted tips to the SEC and, in 2014, the agency announced an award of more than $30 million to an international whistleblower!
At SEC Whistleblower Advocates, we regularly represent foreign nationals. In these representations, we have traveled abroad to meet, conduct due diligence and collect additional evidence of wrongdoing.
Yes. After the financial crisis and the serial misconduct that preceded it, Congress and the Commission wanted to ensure that knowledgeable individuals were empowered and encouraged to report possible securities violations to the SEC. As such, if they satisfy additional procedural requirements, gatekeepers are eligible to participate in the SEC Whistleblower Program. In fact, we represented the first officer of a public company to receive an SEC Whistleblower Program award. Due to the high-stakes and special procedural requirements, potential SEC whistleblowers who serve as gatekeepers may wish to review our related Thomsen Reuters webinars and articles in prominent trade publications.
Individuals with information derived from independent knowledge or independent analysis are eligible to participate in the SEC Whistleblower Program. SEC whistleblowers who provide information about possible securities violations based upon independent analysis are often outsiders without first-hand knowledge or direct evidence of the wrongdoing. These whistleblowers may have garnered the information from business relationships, social interactions or through their analysis of publicly available information. While tips from insiders or individuals with direct evidence of securities violations are more likely to be investigated by the SEC staff, the SEC does investigate high-quality tips from outsiders and has granted them several SEC Whistleblower Program awards.
This is tricky legal terrain and prospective whistleblowers should consult with an attorney to understand what non-privileged evidence can be taken out of a company, the best practices for obtaining that evidence, and how that evidence needs to be handled. As a general rule, SEC whistleblowers are permitted to provide evidence of possible securities violations to the Commission. Many of our strongest whistleblower cases include large collections of company documents and covert recordings. But talk to a lawyer first. Failure to do so may undermine a future whistleblower case and result in unnecessary litigation with the employer.
Determining what to share with the Commission is critically important and is another complex area where an experienced SEC Whistleblower lawyer can be very helpful.
For example, whistleblowers should never share legally privileged information or materials with the SEC. In this context, the most common privileges are the Attorney-Client Privilege and the Attorney Work Product Privilege. As a general rule, if an attorney was involved in the communication or the creation of a particular document, a privilege analysis should be conducted.
Another example relates to maintaining anonymity. SEC whistleblowers who wish to remain anonymous must carefully eliminate potentially identifying information from all SEC communications and filings. Even if the initial whistleblower submission was anonymous, subsequent disclosures of potentially identifying information may make it difficult or impossible for the SEC Staff to protect a whistleblower's identity. Several years ago, a whistleblower’s identity was unintentionally revealed when, during an SEC investigation, a company executive was presented with documentation and recognized the whistleblower’s handwriting. Having spent years in the trenches investigating and overseeing sensitive SEC and DOJ enforcement cases, we at SEC Whistleblower Advocates know how to avoid such mishaps.
You may not know. The Commission is not required to notify SEC whistleblowers if their tips are being investigated. While contact from the Office of the Whistleblower may be a positive development, investigative determinations are only made by the Enforcement Division. Given our partners' experience in that division, we can assure whistleblowers that the most reliable indicator that a tip is being investigated is contact directly from an investigative team in the Enforcement Division. While the amount of time it takes for SEC whistleblower tips to be assigned to an investigative team varies, it is unlikely that a tip is being investigated if the SEC whistleblower or their counsel has not been contacted within six months of filing.
While it can be frustrating, by law, SEC investigations are confidential and non-public. Generally, the SEC Staff will provide information and materials to SEC whistleblowers on a need to know basis only. Periodic updates are not typical. There are special cases where the SEC Staff may more freely share information and materials with whistleblowers that sign a confidentiality agreement with the Commission, but those circumstances are rare.
With their combined decades of work as senior federal prosecutors who built complex securities fraud cases from the ground up, our partners understand the protracted timeline from both sides and can provide our clients with a measure of insider insight, calm and confidence.
Unfortunately, not much. Whistleblowers do not have an independent right to bring an SEC enforcement action and have no say in the SEC settlements of those cases. The Commission retains full prosecutorial discretion regarding which cases to investigate, prosecute or settle. It can be particularly difficult for whistleblowers if the SEC Staff declines to open an investigation or closes an investigation without bringing charges against the wrongdoers. By way of response, some SEC whistleblowers attempt to gain leverage by reporting their concerns to members of Congress or the media. Such attempts are almost always unsuccessful and can be counter-productive or violate employer confidentiality agreements. The best strategy for SEC whistleblowers is to attempt to provide the Staff with significant new evidence that will lead to the opening or re-opening of an investigation into the reported securities violations.
Since 2011, when our practice was founded, only a handful of our whistleblower clients’ tips have not resulted in an inquiry, investigation or examination by the SEC Staff.
Absolutely. Anyone can report possible securities violations to the SEC directly without hiring a lawyer. However, if a whistleblower wishes to remain anonymous, pursuant to the program rules, they must retain a lawyer.
The attorney-client relationship is so important. In our minds, “fit” is key. Given that SEC investigations can take 2-4 years to complete and the award application process can take an additional 2-3 years, this is a long and critically important relationship that is bedrock during an intense and complicated time. Whistleblowers work closely and collaboratively with their lawyers, so you should like and trust them.
Experience is also a key factor. It’s important to look at subject matter expertise, in securities law, particularly garnered in the trenches of law enforcement. Of course, a successful track record in SEC whistleblower matters is another key barometer.
Yes. At SEC Whistleblower Advocates, we represent SEC Whistleblower Program clients throughout the United States and many foreign countries. To better represent these clients, we regularly travel to meet and work with them, wherever they are in the world.
Protecting and advocating for a level playing field and fair, transparent conduct in the markets has been our life’s work. We didn’t launch a law practice as opportunists seeking big fees after Dodd-Frank’s roll-out. We’ve been fighting the good fight for decades. Investor protection isn’t something we do, it’s who we are.
And when it comes to the federal securities laws, we live this stuff. We love getting our arms around the wonky, complex, intricate cases. We understand the issues. We get the process. Our practice is staffed by lawyers who didn’t sit behind desks and file papers; our lawyers built cases, talked to the witnesses, crafted the briefs and ultimately drove litigations that have had historic, precedential impact.
Our firm has been doing this a long, long time. Over the years, we have refined our approach and cemented our offering. We use advanced technologies and a cadre of in-house investigators and analysts to support our SEC whistleblower clients.
We are ultra selective in the cases we accept because we are protective of our well-earned reputation for bringing landmark SEC whistleblower cases and we know the client relationship has to be right for us to be successful. We see our clients as courageous agents of change. In us, they find tenacious advocates who are responsive, responsible and recognized thought leaders in corporate ethics, securities enforcement and whistleblower advocacy.
Like highly specialized surgeons, we are regularly consulted by and work as co-counsel with other law firms on complex, high-profile SEC whistleblower cases. In cases where there is a parallel employment and/or non-SEC whistleblower matter, we regularly work closely with and coordinate our legal representation with other prominent law firms. For example, we co-represented a corporate whistleblower who reported tax violations by Harbinger Capital Management and related individuals and entities. That report resulted in the largest settlement amount and percentage whistleblower award in a New York False Claims Act case not involving Medicaid. See the full story here
At SEC Whistleblower Advocates, we don’t charge potential SEC Whistleblower Program clients for case evaluations.
We represent SEC whistleblower clients on a strictly contingent basis. In other words, SEC whistleblowers are only responsible for paying our legal fee if they are successful. Our clients never pay out-of-pocket fees or expenses incurred during the representation.
If you have information about a possible violation of the federal securities laws and would like to speak to a member of our team, you can electronically submit a case evaluation form on our secure site. Upon receipt, we will promptly review your submission and contact you.
Alternatively, if you would feel more comfortable speaking directly to a member of our whistleblower team, you may call (212) 970-8477.
All case evaluations are confidential and potential whistleblowers may request anonymity during their initial legal consultation.
No, the whistleblower law established by the Dodd-Frank Wall Street Reform and Consumer Protection Act does not require you to use internal reporting channels to be eligible for an award. However, reporting via legal or compliance procedures may increase your award percentage based on the law enforcement interest in encouraging internal compliance, provided you also report to the SEC within 120 days to avoid unreasonable reporting delay.
The Dodd-Frank Wall Street Reform and Consumer Protection Act and other federal and state laws prohibit employers from discharging, demoting, or harassing whistleblowers who report to the SEC. If retaliation occurs, regardless of whether the ongoing investigation leads to an enforcement action, contact our firm immediately. SEC Whistleblower Advocates represented the individual in the first successful prosecution of a company for whistleblower retaliation, and our team provides the legal force needed to seek remedies like double back pay and reinstatement.
Be careful. While independent knowledge is key, documents covered by attorney-client privilege might disqualify you. If you provide information to the SEC that you were not legally allowed to access, it could hurt your award claim.
Contact our lawyers before removing any documents from the workplace or producing any documents to the SEC Whistleblower Program Office or the Commission's investigative staff.
No compliance procedures or confidentiality agreements can impede you from communicating directly with the Commission's whistleblower program regarding securities fraud. In fact, the Commission has brought more than a dozen enforcement actions against companies that have tried to silence their employees. Have us review your severance or employment agreements and protect your rights under the Dodd-Frank Act.
Not necessarily; you may qualify by providing "original information" derived from independent analysis of publicly available data that reveals securities fraud not known to the enforcement agency. If your analysis leads to a successful SEC enforcement action or reopens a previously closed investigation, you may be eligible for an award. You may also provide potentially relevant evidence orally to the SEC staff based upon your independent knowledge and experience.
If you provide original information that leads to a successful enforcement action by the SEC, you may also be eligible for an award based on monetary sanctions collected in a "related action" by other law enforcement authorities, regulatory entities, or a self-regulatory organization. The SEC whistleblower program rules allow you to collect a great monetary award if the other organization's enforcement action is also based on the same whistleblower tip.
Yes, the IRS generally treats a whistleblower award as ordinary income. However, applicable laws may allow you to deduct attorney fees and costs associated with your award claim from your taxable income.
Unlike the False Claims Act, the SEC Whistleblower Program does not include a provision allowing private individuals to litigate securities violations on behalf of the government. Your whistleblower tip must lead to an SEC enforcement action or related action by law enforcement to yield a monetary award; you cannot initiate a court proceeding for the fraud or other wrongdoing yourself.
No. You are not required to use the internal compliance process first. However, if you report internally, you could be eligible for a higher award percentage. Additionally, if you must submit your whistleblower tip to the Securities and Exchange Commission within 120 days of your internal report, the Commission will treat your earlier internal reporting date as the date that you effectively reported to the agency, which could put you ahead of other whistleblowers.
You still get paid. An administrative or court proceeding that results in a settlement over $1 million counts as a covered action. It does not matter if the company admits guilt or just pays the monetary sanctions to end the inquiry.
