SEC Whistleblower Program

By Geoff Hafer, Fall 2016 Student Intern

The SEC, on August 30, 2016, announced that awards to whistleblowers have surpassed the $100 million dollar mark. Considering the whistleblower program has only been around for about five years, that’s pretty remarkable.

Well what exactly is the whistleblower program?

The program was established by Congress to encourage individuals with specific, timely, and credible information about federal securities law violations to report to the SEC.  As an incentive, whistleblowers may be eligible for an award if their information leads to a successful enforcement action.  The awards can range anywhere from 10 percent to 30 percent of the money collected.  To date, more than $107 million has been awarded to 33 whistleblowers, with the largest award being more than $30 million!

 How does it work?

First, you submit a tip through the Office of the Whistleblower.  This can be done anonymously, however you elect to proceed anonymously, you must be represented by counsel if you would like to be eligible for an award.  By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might reveal a whistleblower’s identity.  After the tip is submitted, attorneys and analysts at the SEC review the data and determine how best to proceed.  If the tip leads to an investigation, the SEC then determines whether to charge an individual, entity or both with securities violations.  Once a matter in which $1 million dollars in sanction is ordered is final, a Notice of Covered Action is posted on the SEC website.  From there, you have 90 days to submit a Form WB-APP to apply for an award.  The SEC then takes several factors into account when deciding the percentage to award; (1) the significance of the information provided by the whistleblower, (2) the assistance provided by the whistleblower; (3) any law enforcement interest that might be advanced by a higher award, and (4) the whistleblower’s participation in internal compliance systems.  And finally, pay day!

Click here for a list of the top ten pay outs to date.