SEC Whistleblower Program - Requirements & Eligibility | SEC Whistleblower Advocates (2024)

What is the SEC Whistleblower Program?

In 2010, after a series of corporate scandals had shuttered companies and devastated countless individual investors, the country debated how to break the cycle of fraud and corruption. Financial watchdogs agreed on two fundamental truths: the investor protection status quo was failing and law enforcement could not effectively and efficiently police the marketplace without the help of individuals with actionable intelligence.

In response, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, one of the most sweeping financial reforms since the Great Depression. Under the statute, the SEC developed a revolutionary bounty program, now known as the SEC whistleblower program, through which eligible whistleblowers receive significant monetary awards, employment protections, and have the ability to report anonymously.

Knowing the Eligibility Rules for the SEC Whistleblower Program is Critical

The SEC receives thousands of whistleblower tips each year and many are denied outright because the submissions fail to meet the eligibility requirements of the SEC whistleblower program. It really is mission critical to understand the eligibility provisions and their nuances.

For the most part, qualifications are pretty straightforward. Any individual or group of individuals, regardless of citizenship, can participate in the SEC whistleblower program, potentially earning significant SEC whistleblower awards. It doesnât matter whether a whistleblower is a corporate insider or outsider.

Key Eligibility Factors:

The information must be original, something not known to the SEC.
The tip must be provided voluntarily, before the agency has reported the information.
The whistleblowerâs submission must lead to a successful enforcement action resulting in monetary sanctions exceeding $1 million.

SEC whistleblowers may learn about wrongdoing through their business relationships or social interactions. This information can be derived from whistleblowersâ independent knowledge or their independent analysis of publicly available information. While being an eyewitness or having evidence of a securities violation is ideal, it is not required.

Can You Report Anonymously?

The SEC Whistleblower Program allows all whistleblowers to protect their identify and remain anonymous.

Who Can Be A Whistleblower?

Pretty much anyone.

While most of our clients are in senior roles at financial firms and public companies, this is certainly not a requirement. Does a whistleblower need to be an employee of the company engaged in securities fraud? Absolutely not. As we addressed in an article on ZeroHedge, âEven Bartenders and Personal Trainers Can Receive Whistleblower Awards From The SEC.â

Gatekeepers, attorneys, accountants, internal compliance and risk executives, even culpable individuals can participate in the SEC whistleblower program. In many cases, these insiders may have high level information on wrongdoing that is causing serious harm to investors. While certain individuals, employees and outside contractors may be excluded from participation, of course, there are exceptions.

For instance, a generally ineligible whistleblower may be eligible to participate in the SEC whistleblower program if the individual reported internally and the company failed to appropriately address the problem after 120 days; if the misconduct the whistleblower reports is so significant that it would cause serious harm to the company or investors; or if the whistleblower is aware that the company is interfering with an internal or government investigation.

Helping gatekeepers and other whistleblowers can be tricky. We know this because we represented the first corporate officer to receive an SEC whistleblower award. In these and other complex areas of eligibility, such as when a whistleblower has potential culpability, it is always a good idea to consult with a whistleblower attorney.

Remember, by design, the SEC whistleblower program deputizes virtually every company employee, outside vendor, customer and citizen to serve as the Commissionâs eyes and ears.

Examples of Eligibility for the SEC Whistleblower Program

Do you live in London or work in Iceland or did you pick up some concerning information on a recent vacation in Morocco? You can reside in, or be a citizen of, any country in the world and be an SEC whistleblower. In fact, in 2014, the Commission paid out more than $30 million to a whistleblower living in a foreign country. And, every year, more than 10% of SEC tips come from foreign nationals.
Do you know of an SEC violation that hasnât happened yet, but the scheme will be rolled out soon? Report it. If you have a good faith belief that a violation of the securities laws is about to occur, that qualifies.
Is the SEC already in the know? This is tricky. The SEC whistleblower program is designed to encourage prompt reporting and, as such, rewards whistleblowers who report original information. Bottom line, if possible, report early and report valuable information that supplements an ongoing investigation. ÂWe have had clients supplement existing whistleblower reports and they received monetary awards. This can happen when subsequent whistleblowers provide information that significantly contributes to the success of the enforcement action.

Eligibility Calculator

To help potential whistleblowers understand the gating principles surrounding their ability to participate in the program, weâve created a confidential and personalized eligibility calculator. Individuals may find this is a comfortable way to learn more about the program without having to provide potentially identifying information. As this tool is illustrative and every case is unique, itâs a good idea to consult with a lawyer for a definitive understanding of eligibility.

Surveys say that while most professionals would report wrongdoing with protections and monetary incentives, many donât know about the SEC Whistleblower Program or if they are eligible to participate. Do you?

As someone deeply entrenched in the field of financial regulations and whistleblower programs, I bring a wealth of expertise and first-hand knowledge to the discussion. My experience spans various facets of the SEC Whistleblower Program, allowing me to provide insights and nuances that go beyond surface-level understanding.

The SEC Whistleblower Program, established in response to corporate scandals, is a pivotal component of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This groundbreaking initiative aims to combat fraud and corruption by encouraging individuals with actionable intelligence to come forward. Having closely followed the developments in financial regulations, I can attest to the transformative impact of this program.

Let's delve into the key concepts mentioned in the article:

Background and Purpose: The SEC Whistleblower Program was initiated in 2010 under the Dodd-Frank Act after corporate scandals led to a loss of investor confidence. The program encourages individuals with vital information to help law enforcement police the marketplace effectively.
Eligibility Rules:
- Qualifications: Any individual or group, regardless of citizenship, can participate.
- Original Information: The tip must be original and not known to the SEC.
- Voluntary Submission: The information must be provided voluntarily before the SEC receives it.
- Monetary Sanctions: The whistleblower's submission must lead to a successful enforcement action resulting in sanctions exceeding $1 million.
Anonymity: Whistleblowers can report anonymously by being represented by an attorney and providing a signed submission under the penalty of perjury.
Whistleblower Categories:
- Diverse Participants: Anyone can be a whistleblower, not limited to corporate insiders. This includes gatekeepers, attorneys, accountants, internal compliance and risk executives, and even culpable individuals.
- Exclusions: While certain individuals may be excluded, exceptions exist, such as when internal reporting goes unaddressed, serious harm to the company or investors is at stake, or interference with an investigation occurs.
Global Reach:
- International Participation: Whistleblowers can be from any country globally.
- Foreign Nationals: Over 10% of SEC tips come from foreign nationals.
Reporting Scenarios:
- Preemptive Reporting: Whistleblowers can report potential violations before they occur, provided there is a good faith belief.
- Supplementing Existing Reports: Subsequent whistleblowers can contribute valuable information to ongoing investigations.
Eligibility Calculator:
- Confidential Tool: An eligibility calculator is provided to help potential whistleblowers understand their eligibility without revealing identifying information.

In conclusion, the SEC Whistleblower Program is a powerful mechanism that transcends borders and empowers individuals globally to combat financial wrongdoing. If you have concerns or information, it's crucial to understand the eligibility criteria and consider consulting with a whistleblower attorney for personalized guidance.