SEC Whistleblower Cases

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The Securities and Exchange Commission has a whistleblower program through which people who have inside information about potential violations of the SEC’s regulations or any securities fraud can anonymously submit reports. This program contains substantial protections for the whistleblowers who report securities fraud and violations. Individuals who come forward to participate in this program might include anyone within a company that has information that is not publicly available about the actions of the company as well as people who have been victimized by the fraud or misconduct. The program helps the Securities and Exchange Commission to clean up the securities industry by providing financial incentives to people who have specific and unique information about insider trading and other prohibited activities. The South Carolina attorneys at The Lovely Law Firm can help to present the information to the Securities and Exchange Commission in a format that might increase the likelihood that the agency will pursue the action.

Background of the whistleblower’s program

The Securities and Exchange Commission implemented its program for whistleblowers following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2011. Provisions for the establishment of the program for whistleblowers were included in Section 922 of the Dodd-Frank Act. This program is intended to reward people who act early and quickly to expose violations of the regulations and laws governing securities who provide substantial evidence that helps the SEC bring cases against the violators and recover money.

The program is intended to assist the Securities and Exchange Commission to identify violators of the securities regulations that the agency enforces. Without the help of people who are willing to report inside information to the agency, the Securities and Exchange Commission would have trouble identifying some of them. Since its inception, the SEC’s program for whistleblowers has resulted in more than $1.7 billion in monetary penalties to violators of securities law. Additionally, $452 million has been returned to investors who were harmed. As of the fiscal year 2018, the program had paid $326 million to the whistleblowers who reported inside information leading to successful prosecutions by the agency. The program has proved to be a powerful tool for the Securities and Exchange Commission in its effort to clean up Wall Street and to protect investors from financial harm.

How the program works

The Securities and Exchange Commission created an office that administers the program for whistleblowers called the Office of the Whistleblower. This is where claims begin within the agency. An individual who wants to provide information must do so voluntarily by giving original information about the alleged securities violations to the Securities and Exchange Commission. If the information that is provided results in a successful enforcement action through which the agency secures monetary sanctions that total more than $1 million, the person who provided the information may receive a monetary reward. In most cases, the information that is provided must be inaccessible to the public, confidential, and unique.

If the information that is provided allows the SEC to recover more than $1 million, the whistleblowers will receive awards ranging from 10% to 30% of the total that is recovered. The potential award percentage that might be received will depend on how significant the information that was provided was.

Whistleblowers who have inside information about commodities and futures report them to the Commodity Futures Trading Commission. The program has the same rules as the SEC’s program, meaning that people who report information to the CFTC that results in successful sanctions of more than $1 million may also receive awards ranging from 10% to 30% of the recovered amounts.

The confidentiality of the reporters is protected throughout the process. The identities of the whistleblowers are not disclosed, and there are rules in place that prohibit retaliation against them. This means that employers that discover that whistleblowers reported them are not allowed to take adverse employment actions against them for making reports. If an employer retaliates against a worker for providing information about it to the Securities and Exchange Commission, the worker may file a retaliation claim against the employer and recover damages.

Both U.S. citizens and foreign nationals in South Carolina are allowed to file claims through the SEC’s program for whistleblowers to potentially receive rewards. The Lovely Law Firm is available to help guide you through the process if you have substantial information to report about securities violations at your company.

In 2018, the Securities and Exchange Commission reported that it awarded more money during the fiscal year to whistleblowers than it had in all of the previous years of the program combined. Thirteen people were awarded a total of $168 million for their meritorious reports. As the awards have increased, the number of submissions has also increased. The agency reports that it received more than 5,000 reports from whistleblowers in 2018.

Rewards for whistleblowers

The percentage of the sanctions the agency recovers based on the whistleblowers’ information will depend on several things. To recover a reward, the Securities and Exchange Commission must succeed in an enforcement action and collect at least $1 million. If the agency recovers more than $1 million, related cases by other agencies and the amounts that they are able to recover count towards the total amount that is calculated for the reward. The following factors are considered when the amount of the reward is determined:

  • How significant the information is
  • The help provided by the whistleblowers and their attorneys
  • The SEC’s interest in deterring companies from violating securities and bank fraud laws

Job protection for whistleblowers

Under the Dodd-Frank Act, employers are prohibited from taking any adverse job action against employees who provide information or assist in the SEC’s investigations. People who are retaliated against for blowing the whistle or cooperating in an investigation may file lawsuits through which they can seek reinstatement, back pay, attorney’s fees, and other damages from the retaliatory action taken by the employers.

Confidentiality

Whistleblowers may remain completely anonymous if they have retained an attorney to represent them. In some cases, the agency may not even know the whistleblower’s identity until it is time for it to pay the reward. This provision is the strongest of all of the confidentiality provisions in the various laws for the federal programs for whistleblowers. It is much stronger than the confidentiality provisions for qui tam relators under the False Claims Act and for people who report tax violations to the IRS. This makes it possible to report bank fraud and securities violations without worrying about your employer discovering that you made the report.

Types of claims

Many different types of claims by whistleblowers have been filed with the Securities and Exchange Commission, including money laundering, stock mispricing, accounting fraud, and Foreign Corrupt Practices Act violations. This program is important to investors and the public at large because it helps to reduce fraud and to prevent financial harm to the economy and individual investors. If you are aware of Something bad happening in a bank or company, Bribery of some kind, Healthcare fraud on the government, or other bad acts, we want to speak with you.

Get help from The Lovely Law Firm in Myrtle Beach

If you have inside information about significant corporate and securities fraud schemes that have been perpetrated by your company against investors and the public, you should talk to an experienced whistleblower attorney at our Myrtle Beach law firm. When you work with us, you can remain anonymous while we help by filing your claim. Contact us today by calling 843.839.4111 to schedule a confidential consultation.

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