Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act created the SEC Whistleblower program. The purpose is to provide incentives to whistleblowers to disclose fraud in connection with securities to the SEC. The law has provisions that protect whistleblowers from retaliation by their employers.
SEC Whistleblower Statute
The SEC is required to pay a reward to individuals who provide “original information” resulting in monetary sanctions exceeding $1 million. To qualify for a whistleblower reward the individual must voluntarily provide original information to the SEC. The original information must lead to a successful enforcement of the action.
If the action is successful, the SEC whistleblower must apply for an award. The SEC has distributed significant awards in the past. There are notable trends in the types of awards the SEC distributes.
Unlike the False Claims Acts these frauds do not have to relate to government money.
Original information is processed by the SEC Whistleblower Office. It is defined by the SEC whistleblower statute, as information that is:
•derived from the independent knowledge or analysis of a whistleblower;
•not known to the SEC; and
•not exclusively derived from an allegation made in a judicial or administrative hearing, in a Governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.
Types of SEC Whistleblower Cases
If an individual decides to file a tip with the SEC there is a process to follow. The types of fraud that can be pursued under this statute include:
- bribery of foreign officials in violation of the Foreign Corrupt Practices Act, and
- securities law violations that create an unfair playing field for the investing public.
Examples of securities fraud include:
•Corporate mismanagement resulting in breach of fiduciary duties to shareholders
•Misstatements/omissions of fact in disclosures to SEC
•Fraudulent accounting practices that misrepresent corporate assets or liabilities
•Backdating stock options
•Aiding & abetting Securities Fraud
If you have a potential SEC Whistleblower case and you would like an experienced attorney to provide a free and confidential consultation:
- Email: firstname.lastname@example.org
- Call: (484) 416-2636
- Or Submit a Contact Form: