The SEC Whistleblower Program – How a Whistleblower Lawyer Can Help

February 28, 2023

The Whistleblower Program of the Securities and Exchange Commission (SEC) was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and has resulted in hundreds of millions of dollars in SEC whistleblower awards. The program is intended to incentivize individuals to report potential securities law violations to the SEC and specifically contemplates the use of a whistleblower lawyer, allowing an SEC whistleblower to potentially remain anonymous from start to finish with the right SEC whistleblower counsel. The SEC program provides monetary awards to whistleblowers who come forward with information that leads to a successful enforcement action, where fines imposed exceed $1 million. Because some of the compliance issues involve huge multinational corporations and hundreds of thousands of stock transactions, SEC whistleblower rewards can be in the tens of millions of dollars, although of course nothing’s ever guaranteed.

SEC whistleblower awards have increased in the aggregate over the years since 2010, mainly because more SEC complaints are being filed. However, the SEC whistleblower unit does not have sufficient manpower to keep up with this growth of revenue. In fact, it should be no surprise, but certain wrongdoers are doing what they can to keep the SEC whistleblower unit too small to be optimally effective. With an understaffed program, it’s more important than ever that you file your case with the right SEC whistleblower law firm to maximize your chance of succeeding with your claim.

SEC whistleblower program - How a whistleblower lawyer can help.

The SEC Whistleblower Program plays a vital role in protecting investors and promoting fair and transparent economic markets. The insider information provided by whistleblowers can assist the SEC in detecting and stopping fraud, manipulation, and other securities law violations that may not otherwise come to the attention of law enforcement agencies. Due to overwhelming caseloads, most government investigative agencies, including the SEC, depend on insiders to step forward with accurate information before they initiate an investigation. Without a whistleblower, the SEC might not even be aware of the issue and so will not be able to address it. With trillions of dollars in play in areas that are under the SEC umbrella for enforcement and regulation, wrongdoers are often willing to spend millions to conceal their conduct and have become pretty good at avoiding detection from casual regulation or reporting. After all, a report is only as good as what’s put in it, and if it’s garbage in, there’s garbage out, and the whistleblower needs to come forth with exposing what was left out or else the system won’t be able to safeguard consumers. Also importantly, as indicated earlier, SEC whistleblowers enjoy some strong and effective protections from retaliation, including that if you use the services of a whistleblower attorney, that SEC whistleblower attorney can report securities law violations for you anonymously, which is another added facet of protection from retaliation by your employer.

How an SEC Whistleblower Lawyer Can Help

Dealing with the government is sometimes like being lost in a maze with no certainty that an exit even exists. Sometimes, just when you think you’re close to escaping, the maze or the rules change and you stay trapped in the labyrinth. The government thought it had designed the SEC Whistleblower Program to be user-friendly, but it’s anything but, with complicated routes to recovery, including the fact that the SEC may settle the case that you brought to them and not even tell you! Anytime you deal with the government or with the law it is best to engage a law firm that has experience in that particular area of the law to seamlessly interface with the government and advance your case in the most precise and positive way possible. It is challenging to navigate the SEC whistleblower process without proper legal guidance. A whistleblower lawyer can assist in several ways, including:

  • Advising on the eligibility of a potential SEC whistleblower claim;
  • Preparing and submitting a claim to the SEC;
  • Helping to protect the anonymity of the whistleblower;
  • Negotiating the amount of the SEC whistleblower award, if any; 
  • Preparing the whistleblower for interviews, depositions, and any proceedings, if any;
  • Brainstorming how to advance your SEC whistleblower case, which may include involving other facets of the government and Department of Justice; and
  • Keeping you informed and educating you about your whistleblower rights every step of the way, as the process may take some time, but the potential whistleblower award at the end and of the knowledge that you’re improving the system for everyone, can be well worth it.

Please note that since the SEC whistleblower program is agency-based and not court-based, it is unlikely that a whistleblower who files a complaint will ever need to attend a formal deposition. Instead, if the SEC is interested in your claim, they may want to interview you – an event for which an experienced SEC whistleblower counsel can help you prepare. The SEC Whistleblower Program is a complex process, and a lawyer can help ensure that your claim is properly prepared and submitted. They can also provide guidance on the potential risks and rewards of becoming a whistleblower and make sure you don’t step on any landmines.  

What Are the SEC Whistleblower Rules?

The SEC Whistleblower Program has specific rules that whistleblowers must follow to be eligible for a monetary award. Two of the key rules are:

  • The information provided must be original and not already known to the SEC; and
  • The information must lead to a successful enforcement action with monetary sanctions exceeding $1 million. 

An SEC whistleblower attorney will review all the SEC Whistleblower Program rules and regulations with you before submitting a claim to ensure that the information provided meets the eligibility criteria. With the large influx of SEC whistleblower complaints, it’s critical to package the complaint as tightly as possibly with the salient violations expressly articulated and the right approach to engage the interest of the SEC, or else your submission will automatically be dropped into the ubiquitous small government cylinder (i.e., the trash can).

At Brown, LLC, our qui tam lawyers are experienced in representing whistleblowers under the SEC Whistleblower Program. If you have information about a potential securities law violation, we encourage you to contact our SEC whistleblower team for a free, confidential consultation, so we can advise you of your rights and potentially work with you to maximize your chance to receive an SEC whistleblower award.