Auditor Independence Whistleblower Lawyers

Under federal securities law, auditors of public companies must be independent of their clients both in fact and in appearance. Rule 2-01(b) of Regulation S-X states: “The [SEC] will not recognize an accountant as independent, with respect to an audit client, if the accountant is not, or a reasonable investor with knowledge of all relevant facts and circumstances would conclude that the accountant is not, capable of exercising objective and impartial judgment on all issues encompassed within the accountant’s engagement.”

The Rule provides a nonexclusive list of specific circumstances that render an accountant nonindependent. This includes circumstances that:

• create a mutual or conflicting interest between the auditor and the client;
• place the auditor in the position of auditing his or her own work;
• result in the auditor’s acting as management or an employee of the client; or
• place the auditor in a position of being an advocate for the client.

Typically, independence cases arise from inappropriate financial or employment relationships between an auditor and a client. Recently, however, the SEC has targeted independence violations that stem from “inappropriate close personal relationships” between auditors and clients, including romantic relationships and excessive socializing.

Contact us today for a free, confidential consultation. to find out the strategies that we have successfully employed to secure SEC whistleblower awards for our whistleblower clients.

Purpose of Auditor Independence Rules

The independence rules are designed to ensure that auditors perform their work in an objective and impartial manner. By remaining independent in fact and appearance, auditors improve the reliability of information used for investment and credit decisions and strengthen public confidence in the financial markets.

As summarized in a motion filed in a case brought against Prager Metis, “Independence is a key principle of public accounting. Dating back to the inception of the securities laws, the Commission emphasized the need for auditors to be independent, including by avoiding contractual alliances with their public audit clients.”

SEC Enforcement Actions for Violations of Auditor Independence

In a speech, former SEC Enforcement Director Andrew Ceresney stressed that auditor independence “is an area of significant importance to the Commission.” He noted that in the past few years, the SEC has brought independence-related cases involving:

• the provision of bookkeeping and expert services to affiliates of audit clients (i.e., audit firms cannot loan their staff to audit clients in a manner that results in the staff’s acting as employees of those companies);

• audit personnel’s owning stock in audit clients or affiliates of audit clients (KPMG agreed to pay $8.2 million to settle the SEC’s charges);

• lobbying on behalf of audit clients (Ernst & Young (“EY”) agreed to pay more than $4 million to settle the charges);

• service by audit-firm employees or affiliates on boards of audit clients (Deloitte agreed to pay more than $1 million to settle the charges);

• preparation of financial statements of brokerage firms that were also audit clients (SEC sanctioned 8 audit firms for preparing the financial statements of brokerage firms that were their audit clients); and

• circumvention of the lead-audit-partner-rotation requirements (the lead partner is prohibited from performing lead-audit-partner services for the same issuer for more than 5 consecutive fiscal years).

In addition, the SEC has stepped up enforcement actions against inappropriately close personal relationships between auditors and clients.

PwC Paid $7.9 Million for Violating Auditor Independence Rules

On September 23, 2019, the SEC announced that PwC paid $7.9 million to settle charges of improper professional conduct in connection with 19 engagements on behalf of 15 SEC-registered issuers and violating auditor independence rules.  The SEC found that “PwC violated the SEC’s auditor independence rules by performing prohibited non-audit services during an audit engagement, including exercising decision-making authority in the design and implementation of software relating to an audit client’s financial reporting, and engaging in management functions.”

“Close Personal Relationships” Lead to Violations of Independence Rules

In an SEC enforcement action, EY, a public accounting firm, agreed to pay $9.3 million to settle charges that two of the firm’s audit partners violated independence rules by getting too close to their clients on a personal level.

The SEC’s first complaint alleges that EY audit partner Gregory Bednar maintained an inappropriately close personal relationship with the chief financial officer (“CFO”) of an EY audit client. The relationship consisted of frequently attending social events together, exchanging gifts, and even taking numerous overnight, out-of-town trips together. The complaint notes that Bednar:

• gifted sports tickets to the CFO, the CFO’s family, or friends of the CFO’s son for use when Bednar was not present;

• took trips with the CFO;

• stayed at the CFO’s vacation home in Hilton Head, South Carolina;

• exchanged hundreds of personal texts, emails, and voicemails with the CFO that did not include meaningful business-related discussion; and

• incurred significant entertainment, travel, and lodging expenses while entertaining the CFO and his family.

The SEC found that the extent and nature of their socializing impaired the audit partner’s independence under Regulation S-X.

The SEC’s second complaint alleges that EY audit partner Pamela Hartford had a romantic relationship with Robert Brehl, the Chief Accounting Officer (“CAO”) of an EY audit client. The main EY partner on the audit engagement, Michael Kamienski, was aware of facts that indicated a possible romantic relationship between Hartford and the CAO. Despite this, Kamienski failed to identify those facts as red flags, failed to perform a reasonable inquiry regarding the extent of the relationship, and failed to raise concerns to EY’s U.S. Independence group.

The SEC brought charges against EY, Hartford, Kamienski, and Brehl. By including Kamienski in the action, the SEC underscored that auditors will not be able to avoid liability by burying their heads in the sand.

Recently, Zuckerman Law was quoted in a Compliance Week article titled “Audit committees need to dig into personal relationships,” which covered this enforcement action. Matthew Stock, former external auditor and current associate at Zuckerman Law, highlighted the impact that independence violations can have on external audit firms and issuers. In addition, he noted that audit committees must judge the significance of these relationships through the lens of whether a reasonable investor would consider them important when making investment decisions.

Primary Audit Deficiencies Identified in PCAOB Audit

Based on 780 issuer audits in 2016, the PCAOB identified the following audit deficiencies in a staff inspection brief:

• Assessing and responding to risks of material misstatement, including the fraud risk involving improper revenue recognition and the types of revenue, revenue transactions, or assertions that may give rise to such risks.
• Auditing internal controls over financial reporting, including “insufficient testing of the design and operating effectiveness of selected controls, particularly those controls that include a review element.  Many of these deficiencies involved testing controls over management’s cash-flow forecasts or other assumptions that the issuer used in determining estimates related to revenue, business combinations, asset impairments, and reserves.”
• Auditing accounting estimates, including fair value measurements. “Audit deficiencies in this area have commonly related to evaluating impairment analyses for goodwill and other long-lived assets and the valuations of assets and liabilities acquired in business combinations. Other areas where deficiencies were identified include revenue-related estimates and reserves, the allowance for loan losses (“ALL”), inventory reserves, and financial instruments.”

Dodd-Frank SEC Whistleblower Reward Program

Under the SEC Whistleblower Program, whistleblowers may be eligible for monetary awards when they voluntarily provide the SEC with original information about violations of federal securities laws that leads to a successful enforcement action that results in monetary sanctions exceeding $1 million.  To learn more about the SEC Whistleblower Program, see our column in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.

Qualifying for an SEC Whistleblower Award

Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected. Since 2011, the SEC Whistleblower Office has awarded nearly $1 billion in awards to whistleblowers.  The largest SEC whistleblower award to date is $114 million.

If you have information that may qualify for an SEC whistleblower award, contact the Director of our SEC whistleblower practice at [email protected] or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential. In conjunction with our courageous clients, we have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies and return funds to defrauded investors. Click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:

Whistleblower Protections for Corporate Whistleblowers

The SEC Whistleblower Program also protects the confidentiality of whistleblowers. Furthermore, the Dodd-Frank Act protects whistleblowers from retaliation by their employers for reporting violations of securities laws.

In addition, the Sarbanes-Oxley Act provides robust protection for corporate whistleblowers.  For information about the Sarbanes-Oxley whistleblower protection law, download our free guide titled Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.

Tips to Successfully Navigate the SEC Whistleblower Process

SEC Whistleblower Lawyers

If you have information that you would like to report to the SEC Whistleblower Office, contact the experienced SEC whistleblower lawyers at Zuckerman Law for a free, confidential consultation. The law firm’s SEC whistleblower attorneys will work to quickly provide SEC whistleblowers with the highest-quality representation.

For more information about whistleblower rewards and bounties, contact the SEC whistleblower lawyers at Zuckerman Law at 202-930-5901 or 202-262-8959.

In contrast to most SEC whistleblower practices, our team includes a Certified Public Accountant and Certified Fraud Examiner with substantial experience auditing public companies and investigating complex fraud schemes. And two lawyers on our team served in senior positions at the U.S. Office of Special Counsel overseeing government investigations of whistleblower claims. We understand the many challenges that the SEC faces in investigating our clients’ disclosures and take measures to increase the likelihood that the SEC will be able to effectively pursue the disclosures we provide on behalf of our clients.

• Matt Stock is a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.  As an auditor, Mr. Stock developed an expertise in financial statement analysis and internal controls testing and fraud recognition.  He uses his auditing experience to help IRS, CFTC and SEC whistleblowers investigate and disclose complex financial frauds to the government and develop a roadmap for enforcement attorneys to take an enforcement action.  Matt has been interviewed on CNBC, quoted extensively about whistleblower rewards in the media, and is the lead author of SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.  Recently the Association of Certified Fraud Examiners published a profile of Matt Stock’s success fighting fraud:

Auditor Independence Principles

In a brief filed in an audit independence enforcement action against Prager Metis for audit independence violations in connection with its audits of FTX, the SEC summarizes key principles of audit independence:

• Independence is a key principle of public accounting. Dating back to the inception of the securities laws, the Commission emphasized the need for auditors to be independent, including by avoiding contractual alliances with their public audit clients. See In the Matter of Am. Terminals and Transit Co., 1 S.E.C. 701, 1936 WL 32788 *6 (September 29, 1936) (protection of investors requires that independent auditors “be free of the entangling alliances which relational and contractual connections with registrants frequently engender, but also that they approach their task with complete objectivity—critical of the practices and procedures of registrants . . . .”).
  The Supreme Court confirmed the Commission’s views and described independent public accountants as a “public watchdog” that must maintain total independence from the client at all times and complete fidelity to the public trust. Arthur Young & Co., 465 U.S. at 818 (public faith in the reliability of a corporation’s financial statements depends upon the public perception of the outside auditor as an independent professional).
• Commission Rule 2-01 of Regulation S-X “is designed to ensure that auditors are qualified and independent of their audit clients both in fact and in appearance.” 17 C.F.R. § 210.2-01 (emphasis added). Rule 2-01(b) provides the general standard of auditor independence that: The Commission will not recognize an accountant as independent, with respect to an audit client, if the accountant is not, or a reasonable investor with knowledge of all relevant facts and circumstances would conclude that the accountant is not, capable of exercising objective and impartial judgment on all issues encompassed within the accountant’s engagement. In determining whether an accountant is independent, the Commission will consider all relevant circumstances, including all relationships between the accountant and the audit client, and not just those relating to reports filed with the Commission. 17 C.F.R. § 210.2-01(b).
• Engagement letters are not mere ordinary contracts for services. Audit engagement letters are themselves subject to prescribed audit standards. See PCAOB Auditing Standard (“AS”) 1301, Communications with Audit Committees, which, among other things, requires the auditor to communicate to the client’s audit committee the responsibilities of the auditor in relation to the audit and establish an understanding of the terms of the audit engagement with the audit committee . . . The engagement letter encapsulates a list of the responsibilities of both the auditor and management, and also refers to the professional standards by which the engagement will be governed and may also describe any limitations of the services being provided.
• Indemnification provisions between an auditing firm and its client create the very type of situation which lead to the appearance of a conflict of interest9 and lack of independence, regardless whether the indemnification provision was ever invoked.10 As the Commission has publicly explained, “if investorIn Commission enforcement actions, a finding of actual impairment or impairment in facts do not believe that an auditor is independent of a company, they will derive little confidence from the auditor’s opinion and will be far less likely to invest in that public company’s securities.” Revision of the Commission’s Auditor Independence Requirements, 2000 WL 1726933, at *2 (Nov. 21, 2000) (“Adopting Release”).
• In Commission enforcement actions, a finding of actual impairment or impairment in fact has not been required to allege a lack of auditor independence. One such example is found in In the Matter of Ernst & Young LLP et al. (“EY”), 2016 WL 4983302 (Sept. 19, 2016), a settled administrative and cease-and-desist proceeding. The EY matter was based on allegations under the general standard of independence that an auditing firm’s employee and member of the audit engagement team had a close personal relationship with the chief accounting officer at the audit client, which created the appearance of a violation of independence between auditor and client. Additionally, the prohibition of a close personal relationship with the audit client is not specifically identified in the non-exclusive circumstances that are inconsistent with independence in Rule 2-01(c) of Regulation S-X [17 C.F.R. § 210.2-01(c)] (“Rule 2-01(c)”); however, it is well understood that this is the type of relationship that would impair independence. The Commission has brought other cases based on alleged violations of the Commission’s independence rule for actions not specifically identified in Rule 2-01(c). See In the Matter of Ernst & Young LLP, 2021 WL 3410672 (Aug. 2, 2021) (settled order in administrative and cease-and-desist proceeding against auditing firm and its partners alleging independence violations related to competitive bid process); In the Matter of Ernst & Young LLP, 2014 WL 3401161 (July 14, 2014) (settled order in administrative and cease-and-desist proceeding against auditing firm alleging auditing firm improperly advocated for an audit client in violation of the Commission’s independence rules.).

Whistleblower Lawyers Representing Auditors

SEC Whistleblower Bounties

Whistleblower Protections for Auditors

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Internal Control over Financial Reporting (ICFR)

Under federal law, publicly traded companies are responsible for devising and maintaining a system of internal accounting controls sufficient to reasonably assure that:

• transactions are executed in accordance with management authorization;
• transactions are recorded as necessary to:
  • permit preparation of financial statements in conformity with GAAP; and
  • maintain accountability for assets;
• access to assets is permitted only in accordance with management authorization; and
• recorded accountability for assets is compared with the existing assets at reasonable intervals, and appropriate action is taken regarding any differences.

SEC Whistleblower Program

Under the SEC Whistleblower Program, whistleblowers may be eligible for monetary awards when they voluntarily provide the SEC with original information about violations, including inadequate internal controls, that leads the SEC to bring a successful enforcement action that results in monetary sanctions exceeding $1 million. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected. If represented by counsel, a whistleblower may submit a tip anonymously to the SEC.

Since 2012, the SEC Whistleblower Office has issued nearly $1 billion in awards to whistleblowers. The largest SEC whistleblower awards to date are $114 million and $50 million. See below for details about a $22 million award to an SEC whistleblower who exposed inadequate internal accounting controls.

In conjunction with our courageous clients, our SEC whistleblower lawyers have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies, and return funds to defrauded investors.

If you have original information that you would like to report to the SEC Office of the Whistleblower, contact the Director of our SEC Whistleblower Practice at [email protected] or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential.

Qualifying for an SEC Whistleblower Award

For more information about the SEC Whistleblower Program, see our eBook Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award. Click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:

Inadequate Internal Accounting Controls

Over the past few years, the SEC has increasingly enforced rules that require companies to maintain sufficient internal controls over financial reporting (“ICFR”). Despite this, a recent report by the Public Company Accounting Oversight Board (“PCAOB”) revealed that one of the most frequent audit deficiencies continues to be inadequate internal accounting controls. Violations include:

• failing to devise and maintain adequate internal controls, as specified under Section 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange Act”);
• failure by management to evaluate the effectiveness of ICFR as of the end of each fiscal year, as required by Exchange Act Rule 13a-15(c);
• failure to maintain evidential matter, including documentation, to provide reasonable support for management’s assessment of the effectiveness of the ICFR, as required by Item 308 of Regulation S-K; and
• invalid certifications by the executives and financial officers that confirm that the Form 10-Q or 10-K does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements not misleading in light of the circumstances under which the statements were made, as required by Exchange Act Rule 13a-14.

Purpose of Internal Accounting Controls

Maintaining adequate ICFR provides companies, investors, and other interested parties with reasonable assurance that misstatements, omissions, and fraud will timely be prevented or detected. This assurance is especially critical in a time when external auditors have consistently failed to identify flaws in public companies’ ICFRs.

In 2016, the PCAOB inspected 12 publicly traded companies audited by PwC and found deficiencies in 10 of the audits related to testing controls for purposes of the ICFR opinion. PwC revised its opinion on internal controls in 6 cases. At Deloitte, the PCAOB identified problems in the internal-control audit for all 13 of the audits selected.

As former SEC Chair Arthur Levitt recently noted in a Wall Street Journal op-ed, “[g]ood internal controls are essential bulwarks against sloppiness, errors and irregularities. An audit might make sure that inventories are reported accurately, or that vendors are legitimate, or that cybersecurity policies and antihacking protocols are implemented effectively. Auditors may review internal emails to detect potential fraud. They can see into the regular operations of a company and, if empowered, call out the kinds of mistakes or malfeasance that leads to major financial restatements and other market-moving events.”  In cautioning against a proposal to exempt more companies from internal control audits, Chair Levitt notes that from 2014-16, exempted companies had a restatement rate of 11.2%, while similarly sized companies still subject to the audit requirements had a rate of 6.2%.

Internal Controls Prevent and Reveal Fraud

Recent ground-breaking research about internal control deficiencies underscores the critical role of internal controls in detecting and preventing fraud.  In an August 2017 article titled Internal Control Weakness and Financial Reporting Fraud published in Auditing: A Journal of Practice & Theory, the authors demonstrate a strong correlation between material weaknesses and future fraud revelation.  A summary of the article in CFO notes that about 30% of fraud revelations were preceded by reports of material weakness.

SEC Enforcement Actions

Inadequate Internal Accounting Controls Lead to $22M SEC Whistleblower Award

In a recent enforcement action, on August 30, 2016, the SEC issued a $22 million award to a whistleblower who exposed that Monsanto had inadequate internal accounting controls to account for millions of dollars in rebates. Monsanto’s deficient controls caused it to materially misstate its earnings during a 3-year period. While the SEC investigation found no personal misconduct, the company was fined $80 million for the accounting violations.

SEC Chairman Mary Jo White stated, “Financial reporting and disclosure cases continue to be a high priority for the Commission and these charges show that corporations must be truthful in their earnings releases to investors and have sufficient internal accounting controls in place to prevent misleading statements.”

Additional SEC Enforcement Actions Against Inadequate Internal Accounting Controls

Inaccurate Accounting of Reserves for Annuity Benefits

On December 18, 2019, MetLife, Inc. agreed to pay $10 million to settle charges that it violated the books and records and internal accounting controls provisions of the federal securities laws relating to two errors in its accounting for reserves associated with its annuities businesses.  In particular, MetLife improperly released reserves for annuity benefits associated with MetLife’s Retirement and Income Solutions Business – that is, reducing liability for future policy benefits, which resulted in a corresponding increase in income. To correct the error, MetLife increased reserves by $510 million pre-tax.  The SEC’s order also finds that MetLife overstated reserves and understated income relating to variable annuity guarantees assumed by a MetLife subsidiary.  MetLife disclosed that this error was caused by data mistakes, including a failure to properly incorporate policyholder withdrawals into MetLife’s valuation model.  To correct this error, MetLife reduced reserves by $896 million as of year-end 2017.

Failure to Report Tax Liabilities of Controlled Foreign Subsidiary

On January 23, 2017, Overseas Shipholding Group Inc. (OSG) agreed to pay $5 million fine to the SEC to settle charges it failed to report hundreds of millions of dollars in tax liabilities for over a decade. According to the SEC’s order, OSG and its former chief financial officer, Myles Robert Itkin, failed to report a controlled foreign subsidiary’s federal income tax liabilities in financial statements from 2000 through 2012. This failure caused the company to significantly understate its net loss in that same period and ultimately file for bankruptcy in 2012.

Gerald Hodgkins, Associate Director of the SEC’s Enforcement Division, stated “Where public companies derive economic benefits from their offshore earnings, it is critical that those responsible for the company’s accounting and financial reporting understand the federal income tax consequences triggered from these benefits.”

Improper Revenue Recognition 

On January 11, 2017, the SEC fined an aerospace contractor, L-3 Technologies Inc., $1.6 million for improperly recording revenue on contracts.  In late 2013, L-3 realized that it was at risk of not meeting its performance target.  In order to inflate revenue, and in violation of L-3’s revenue recognition policy, the VP of Finance directed employees to generate roughly 69 invoices and then recognize $17,9 million in income.  This extra revenue allowed L-3 to meet its performance target and qualify for incentive bonuses. This practice of improperly recognizing revenue was not uncommon.

In total, L-3’s inadequate internal controls for revenue recognition led to inflated pre-tax income of $169 million. This caused the company to amend its SEC filing in October 2014.  SEC Director Andrew Calamari noted, “[a]dequate internal accounting controls function as a critical safeguard against the type of improper revenue recognition that occurred at L3.”

Failure to Maintain Adequate Internal Controls to Prevent Insider Trading

On August 21, 2017, hedge fund Deerfield Management Company L.P. paid approximately $4.6 million to settle charges that it failed to maintain adequate controls to prevent the misuse of inside information.  According to the SEC’s complaint, a former government employee with inside information about upcoming CMS decisions concerning Medicare and Medicaid reimbursement rates related to cancer treatments or kidney dialysis tipped two analysts at a hedge fund.  The hedge fund was paying him approximately $193,000 to provide political intelligence consulting.  The hedge fund’s use of this suspicious information violated its procedures barring insider trading.

Insufficient Controls Resulting in Unauthorized Payments to Executives

On December 11, 2017, took enforcement action against a biotechnology company for its failure to maintain sufficient controls surrounding the reporting and disclosure of travel and entertainment expenses submitted by its executives.  The company’s former CEO treated the company “as his personal piggy bank,” obtaining millions of dollars from the company using limited, fabricated, or non-existent expense documentation, and these unauthorized perks and benefits were not disclosed to investors.  Examples include cosmetic surgery for friends and personal travel.  The company’s “insufficient internal accounting controls contributed to and failed to detect these improper and unauthorized payments, which were not accurately recorded in the company’s books and records.”

SEC Whistleblower Rewards and Bounties 

If you have information that may qualify for an SEC whistleblower award, contact the Director of our SEC whistleblower practice at [email protected] or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential.

In conjunction with our courageous clients, we have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies, and return funds to defrauded investors. Read our tips for SEC whistleblowers and Forbes column about the success of the SEC whistleblower program.

As discussed in our articles, the SEC whistleblower program has become a very effective enforcement tool for the SEC.  But very few whistleblowers have received awards, which underscores the importance of having experienced counsel represent a whistleblower effectively at the SEC.

• MarketWatch: More than 33,000 tips, $2.5 billion in financial remedies and $500 million in awards to investors — the SEC’s whistleblower program turns 10 years old today
• Going Concern: Here Are 6 Reasons Why the SEC Whistleblower Program Is Successful
• National Law Review: 5 Ways that Experienced SEC Whistleblower Law Firms Can Effectively Advocate for Whistleblowers
• D&O Diary: How the SEC Whistleblower Program Has Changed Corporate Compliance and SEC Enforcement

Whistleblower Protections for SEC Whistleblowers

The SEC Whistleblower Program also protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. And the Dodd-Frank Act protects whistleblowers from retaliation by their employers for reporting violations of securities laws to the SEC.

In addition, the whistleblower protection provision of the Sarbanes-Oxley Act protects disclosures about deficient internal controls.  On the fifteenth anniversary of SOX, the SOX whistleblower lawyers at Zuckerman Law released a free guide to the SOX whistleblower protection law:  Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.

The guide summarizes SOX whistleblower protections and offers concrete tips for corporate whistleblowers based on lessons learned during years of litigating SOX whistleblower cases.

Download our guide to SOX whistleblower protection:

SEC Whistleblower Law Firm

For more information about whistleblower rewards and bounties, contact leading whistleblower law firm Zuckerman Law for a free, confidential consultation at 202-262-8959.

• See our column in Forbes:  One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.
• See our column in Going Concern:  Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever.
• See our post in Accounting Today: Whistleblower Protections and Incentives for Auditors and Accountants.

Click here to read reviews and testimonials from former clients.

SEC Whistleblower Attorneys

SEC Whistleblower Process

Fraudsters Using EB-5 Immigrant Investor Program To Scam Investors

As detailed in a June 2018 Congressional hearing, there has been a rise in investment fraud in the EB-5 Immigrant Investor Program.  The EB-5 program, administered by the U.S. Citizenship and Immigration Services (USCIS), provides a path to legal residency for foreigners who invest directly in a U.S. business or private regional centers that promote economic development in specific areas and industries.  The purpose of the EB-5 program is to stimulate the U.S. economy through job creation and capital investment by foreign investors.  Lately, however, marketers have used this investment-for-visa program to defraud investors.

In a typical scheme, a company/Regional Center and its fundraisers will solicit EB-5 investors with the promise of high rates of return or U.S. residency.  In some instances, the companies will even guarantee that the investments are risk-free.  In reality, many of these companies act as Ponzi schemes or other illegal operations.  The common SEC violations (see examples below) arising out of EB-5 schemes include:

• False or misleading EB-5 advertisements in violation of Section 10(b)-5 of the Securities Exchange Act of 1934;
• Theft or misuse of investor funds in violation of Section 17(a) of the Securities Act of 1933; and
• Improper solicitation of investors by unregistered broker-dealers in violation of Section 15(a) of the Securities Exchange Act of 1934.

Due to the prevalence of EB-5 fraud, the SEC has released an investor alert to warn investors about potential scams in EB-5 offerings. Moreover, USCIS released its Annual Report to Congress, which noted that “fraud-in the form of embezzlement, securities violations, investment schemes, and criminal conduct-has plagued the Regional Center program since its inception.” According to a letter from Senator Grassley, the EB-5 program has become riddled with fraud and EB-5 groups are telling investors they have “bought off the White House.”

See our article: How to Report EB-5 Fraud and Earn an SEC Whistleblower Award.

SEC Whistleblower Program: Awards for Reporting EB-5 Fraud

Under the SEC Whistleblower Program, individuals can receive an award for exposing EB-5 fraud. In fact, the SEC has already issued a $14.7 million award to an individual who exposed a fraudulent EB-5 scheme.

In testimony on the EB-5 immigrant investor program, the SEC’s Associate Director, Division of Enforcement, stated: “The SEC is committed to investigating fraudulent investment schemes arising from the EB-5 program, and will remain focused on this area and the key participants who offer and sell these investments.”

We have successfully represented a whistleblower disclosing EB-5 fraud to the SEC. If you have information that may qualify for an SEC whistleblower award, contact the Director of our SEC whistleblower practice at [email protected] or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential.

In conjunction with our courageous clients, we have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies and return funds to defrauded investors. Read our tips for SEC whistleblowers.

How to Qualify for an SEC Whistleblower Award

For more information about the SEC Whistleblower Program, see our eBook Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award. Click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:

SEC EB-5 Enforcement Actions

In 2017 alone, the SEC brought enforcement actions against nearly $1 billion worth of EB-5 projects. A majority of these enforcement actions are against individuals or companies that misuse investors’ funds (see examples below). Notably, the scrutiny over EB-5 projects has only increased since then.

Improperly Advertising EB-5 Projects As “Risk-Free” 

On July 26, 2016, the SEC obtained a $63.8 million judgment against an oil company for a scheme that targeted EB-5 investors.  The SEC alleged in their complaint that Luca International Group, LLC and its entities (collectively, the “Luca Entities”), targeting investors in Asia to invest in unregistered offerings of securities.  Luca Entities represented to investors that their money would be invested in oil and gas drilling operations, and that they could expect risk-free annual rates of return of 20-30 percent.  Luca Entities deceived investors by misrepresenting that their operations as successful, all while knowing that the company was losing millions of dollars.  Luca Entities maintained this deception by using money from new investors to make sham profit payments to earlier investors until its bankruptcy in August 2015.

Illegal Brokering of EB-5 Investments

On June 23, 2015, the SEC charged two firms (Ireeco LLC and Ireeco Limited) that illegally brokered more than $79 million of investments by EB-5 investors seeking U.S. residency.  Ireeco LCC used its website to solicit EB-5 investors and provide them with the “information and education” they would need in choosing the right regional center to invest with.  After securing foreign investors from the website, Ireeco LCC would then direct them to the same handful of regional centers that paid the company a commission averaging around $35,000 per investor.  While raising money for EB-5 projects in the U.S., these two firms were not registered to legally operate as securities brokers.   The SEC sought to disgorge all of the ill-gotten gains and subject the companies to civil penalties pursuant to Sections 21B and 21C of the Exchange Act.

For more information illegal payments to unregistered persons, click here for FINRA’s Rules.

Misusing EB-5 Investments: $72 Million

On December 27, 2016, the SEC charged a California-based attorney, Emilio Franscisco, with stealing money over $9.6 million from EB-5 investors.  According to the SEC’s complaint, Franscisco raised $72 million from investors in China to invest in EB-5 projects that included opening Caffe Primo restaurants, developing assisted living facilities, and renovating a production facility for environmentally friendly agriculture and cleaning products.  Instead of using investors’ funds for the EB-5 projects, Franscisco used the money to purchase a yacht, and finance his own businesses and luxury lifestyle.

Misusing EB-5 Investments: $136 Million

On January 11, 2017, the SEC received a settlement offer from real estate developer and former Tibetan monastery student, Lobsang Dargey, in a $136 million EB-5 fraud case.  This could signal a possible resolution to the high-profile case.  In late 2015, the SEC ordered  an asset freeze against Dargey and his “Path America” companies after raising at least $135 million for two real estate projects.  Instead of properly investing the money, Dargey diverted $14 million for unrelated real estate projects and $3 million for personal use including the purchase of his $2.5 million home and cash withdrawals at casinos. 

On April 28, 2017, the SEC posted the case on its “Notice of Covered Actions” page where all actions resulting in monetary sanctions exceeding $1 million are listed. Once a notice is posted, whistleblowers and their attorneys have 90 calendar days to apply for an award. For a link to the SEC’s complaint against Dargey and his Path America companies, click here.

Misusing EB-5 Investments: $100 Million

On January 18, 2017, the SEC charged California-based San Francisco Regional Center, LLC and owner Thomas Henderson with combining over $100 million he raised from EB-5 investors into a general fund from which he allegedly misused at least $9.6 million to purchase his home and personal items and improperly fund several personal business projects that were unrelated to the companies he purportedly established to create jobs consistent with EB-5 requirements. Furthermore, Henderson used $7.5 million of investor money to pay overseas marketing agents, and he shuffled millions of dollars among the EB-5 businesses to obscure his fraudulent scheme.

Misusing EB-5 Investments: $26.9 Million

On February 16, 2017, the SEC recommended a $65.7 million penalty against a husband and wife who allegedly misappropriated the bulk of $26.9 million raised in an EB-5 investment project. According to the SEC’s complaint, the couple defrauded at least 50 Chinese investors by falsely claiming that their monies would be invested in an approved EB-5 project to build and operate a proton therapy cancer treatment center (Beverly Proton Center, LLC) in Southern California. Rather than invest the money, the couple misappropriated at least $7.7 million for themselves and transferred more than $11.8 million to three marketing firms in China, including $3.5 million to a firm of which the husband is CEO and chairman of the board.

Misusing EB-5 Investments: $50 Million

On April 5, 2017, federal authorities raided a business run by a California attorney and her father suspected of orchestrating a $50 million EB-5 visa scheme. According to the court filings, the father-daughter company, California Investment Immigration Fund, LLC (CIIF), raised money from more than 100 Chinese investors for business projects that would qualify the investors for U.S. green cards if the project created at least ten jobs. However, rather than legitimately investing the funds into the projects, CIIF hired high school students to pose as full-time employees for bogus projects and used the investors funds for personal expenses, including buying million-dollar homes, and other improper uses.

This father-daughter scheme began around 2008 and was undetected for years. Due to a lack of oversight of the EB-5 projects, many of CIIF’s investors were even able to improperly obtain U.S. green cards without invest in legitimate businesses or creating any jobs. Notably, three of the CIIF’s investors who received green cards were fugitives wanted by the Chinese government.

Misusing EB-5 Investments: $350 Million

On April 13, 2017, Raymond James & Associates Inc. agreed to pay $150 million to settle a suit accusing two Vermont ski resorts of  misappropriated the majority of $350 million raised through the EB-5 immigrant investors program. According to the SEC’s complaint, Raymond James and former branch manager Joel Burstein allegedly masterminded a Ponzi scheme to cheat 836 foreign investors out of at least $200 million of the funds raised for the EB-5 projects. Investors were told the funds were raised to complete various improvement projects. Instead, a majority of the funds were used for other-than-stated purposes, including the purchase of a luxury condominium, payment of one of the EB-5 operator’s income taxes, and the acquisition of an unrelated ski resort.

Misusing EB-5 Investments: $140 Million

On April 28, 2017, the SEC announced that the operator of a $140 million EB-5 project, Serofim Muroff, has agreed to pay back more than $5 million dollars that he stole from the EB-5 investor funds. According to the SEC’s complaint, Muroff used the investor funds to purchase two personal residences, a Ranger Rover, a BMW, and invest in an unrelated zip line operation. Like most EB-5 schemes, Muroff targeted Chinese investors with the promise of developing luxury real estate in the United States. In addition to pay $5 million in disgorgement, Muroff was required to pay interest totaling nearly $1 million and a penalty of $2 million.

Misusing EB-5 Investments: $89 Million

On June 22, 2017, the SEC filed a complaint against a Chicago-based immigration attorney, Taher Kameli, and his companies for misusing investor funds in an $89 million EB-5 project. According to the SEC’s complaint, Kameli raised funds from mostly Chinese and Iranian investors by advertising an EB-5 construction project for senior living facilities in Illinois and Florida. Contrary to Kameli’s representations, however, the SEC alleges that he spent millions of dollars of investor funds for his own benefit, for the benefit of his brother, and for the befits of his companies. In addition, the SEC alleges that Kameli diverted millions of dollars to fund other projects and to make unrelated payments.

SEC Whistleblower Bounties and Rewards

Under the SEC Whistleblower Program, whistleblowers may be eligible for monetary awards when they voluntarily provide the SEC with original information about violations that leads the SEC to bring a successful enforcement action resulting in monetary sanctions exceeding $1,000,000.  Whistleblowers are eligible to receive between 10 percent and 30 percent of the monetary sanctions collected.

Since 2012, the SEC Whistleblower Office has issued more than $1 billion in awards to whistleblowers.

See our column in Forbes:  One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.

Protections for EB-5 Whistleblowers

The SEC Whistleblower Program also protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. Furthermore, the Dodd-Frank Act protects whistleblowers from retaliation by their employers for reporting violations of securities laws.

Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.

The anti-retaliation provision of the Sarbanes-Oxley Act provides robust protection for corporate whistleblowers.  To learn more about corporate whistleblower rights, download our guide Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.

SEC Whistleblower Law Firm

For more information about whistleblower rewards and bounties, contact the SEC whistleblower lawyers at Zuckerman Law at 202-262-8959.

To learn more about the SEC Whistleblower Program, download Zuckerman Law’s eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award

EB-5 SEC Whistleblower Rewards

Yes, under the SEC Whistleblower Program, individuals can receive an award for exposing EB-5 fraud. In fact, the SEC recently issued an investor alert for EB-5 projects due to EB5 fraud. In these schemes, typically there will either be misleading advertising such as guaranteeing that the investments are risk free or guaranteeing that they will receive U.S. residency after investing in the project, or they will receive the funds and spend them for improper things such as on other projects or even for buying their own personal luxury items.

Deceptive Non-GAAP Accounting and the SEC Whistleblower Program

The SEC has stepped up its enforcement of public companies’ misleading use of non-GAAP financial measures. These measures are susceptible to abuse, and they can distort financial statements and mislead investors. See our recent article in Accounting Today, Deceptive non-GAAP financials will lead to future SEC whistleblower awards, for details on the recent increase in deceptive non-GAAP financials. The SEC has established an internal task force to investigate public companies’ use of misleading non-GAAP accounting.

The SEC Whistleblower Program provides awards to whistleblowers when they provide original information to the SEC that leads to a successful enforcement action with total monetary sanctions in excess of $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected. If represented by counsel, a whistleblower may submit a tip anonymously to the SEC. The largest SEC whistleblower awards to date are $114 million and $50 million.

If you have information that may qualify for an SEC whistleblower award, contact the Director of our SEC whistleblower practice at [email protected] or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959.

All inquiries are confidential. In conjunction with our courageous clients, we have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies and return funds to defrauded investors.

See our tips for SEC whistleblowers and Forbes column about the success of the SEC whistleblower program.

Recently the Association of Certified Fraud Examiners published a profile of SEC whistleblower lawyer Matt Stock’s success working with whistleblowers to fight fraud:

Non-GAAP Financial Accounting Requirements

Under SEC Rules, companies are required to meet certain disclosure and reporting requirements in order to issue non-GAAP financial measures. These requirements include but are not limited to compliance with:

• Regulation G, which requires public companies that disclose or release non-GAAP financial measures to include a presentation of the most directly comparable GAAP financial measure and a reconciliation of the disclosed non-GAAP financial measure with the most directly comparable GAAP financial measure; and
• Item 10 of Regulation S-K and Item 10 of Regulation S-B, which require public companies to include a statement concerning the use of non-GAAP financial measures in filings. This statement should include: (1) reasons why management believes that the non-GAAP presentation provides useful information to investors regarding the company’s financial condition and results of operations; and (2) to the extent that they are material, any additional purposes for which the company uses the non-GAAP financial measures.

Deceptive Non-GAAP Financials

In addition to complying with the stated SEC Rules, issuers that report non-GAAP financial measures must ensure that the financial statements and disclosures are not deceptive. In new guidance, the SEC explains that certain adjustments, although not explicitly prohibited, may violate Rule 100(b) of Regulation G if they cause the presentation of the non-GAAP measures to be misleading. For example, a company would violate Regulation G by failing to present information consistently from one period to the next.

SEC Chair Mary Jo White highlighted the agency’s focus on non-GAAP measures in a December 2015 speech:

This area deserves close attention, both to make sure that our current rules are being followed and to ask whether they are sufficiently robust in light of current market practices. Non-GAAP measures are allowed in order to convey information to investors that the issuer believes is relevant and useful in understanding its performance. By some indications, such as analyst coverage and press commentary, non-GAAP measures are used extensively and, in some instances, may be a source of confusion.

According to a recent article Earnings surprises are bigger, thanks to growing use of non-GAAP metrics, many companies are using non-GAAP metrics to manipulate earnings.  In particular, a study by  Paul A. Griffin and David H. Lont found that about 90% of S&P 500 companies use at least one non-GAAP measure in earnings releases. Their study titled “Evidence of a Positive Trend in Positive Quarterly Earnings Surprise over the Past Two Decades” is available here.

SEC Enforcement Actions Against Deceptive Non-GAAP Reporting

In its first enforcement action brought under Regulation G, the SEC brought charges against SafeNet Inc. for using non-GAAP financial measures to issue materially false and misleading information concerning its financial condition. According to the SEC’s complaint, SafeNet’s management used improper adjustments to meet or exceed quarterly earnings targets. These adjustments included the improper classification of ordinary operating expenses as non-recurring integration expenses and the improper reduction of accruals for professional fees and inventory reserves. The SEC required SafeNet to pay a civil penalty of $1 million.

In another enforcement action, on January 18, 2017, the SEC charged New York-based marketing company, MCD Partners, a $1.5 million penalty for improper use of non-GAAP measures. According to the SEC’s order, the company presented inconsistent non-GAAP measures without disclosing investors of the changes. This inconsistency allowed the company to deceptively inflate its “organic revenue growth” results. In addition, MDC Partners also failed to give GAAP metrics equal or greater prominence to non-GAAP metrics in its earnings releases.

On August 1, 2019, Brixmor Property Group Inc., a publicly-traded real estate investment trust, agreed to pay a $7 million penalty in connection with a scheme to manipulate a key non-GAAP metric relied on by analysts and investors to evaluate the company’s financial performance. The SEC’s complaint alleges that from the third quarter of 2013 to the third quarter of 2015, Brixmor CEO Michael Carroll, CFO Michael Pappagallo, CAO Steven Splain and Senior VP of Accounting Michael Mortimer improperly adjusted Brixmor’s same property net operating income in order to report quarterly numbers that hit the Company’s publicly-issued growth targets.

SEC Whistleblower Program

Under the SEC Whistleblower Program, whistleblowers may be eligible for monetary awards if they voluntarily provide the SEC with original information about violations of federal securities laws that leads the SEC to bring a successful enforcement action that results in monetary sanctions exceeding $1 million. Since 2012, the SEC Whistleblower Office has issued nearly $1 billion in awards to whistleblowers.

SEC Whistleblower Process

SEC Whistleblower Awards

Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected. In October 2020, the SEC awarded a whistleblower $114 million for providing key information that led to a successful enforcement action.

For more information about the SEC Whistleblower Program, see our eBook Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award. Click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:

Protections for SEC Whistleblowers Disclosing Use of Non-GAAP Financial Measures

The SEC Whistleblower Program also protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. Furthermore, the Dodd-Frank Act and Sarbanes-Oxley Act protect whistleblowers from retaliation by their employers for reporting potential violations of securities laws.

Call our leading SEC whistleblower protection lawyers today at 202-262-8959.

SEC Whistleblower Law Firm

For more information about whistleblower rewards and bounties, contact the SEC whistleblower lawyers at Zuckerman Law at 202-262-8959.

To learn more about the SEC Whistleblower Program, download Zuckerman Law’s eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award:

PwC Settlement in $5.5 Billion Bankruptcy Case of Former Client Underscores the Critical Gatekeeper Role of Auditors

In the largest accounting negligence case to go to trial, PricewaterhouseCooopers (PwC) was accused of enabling a $5.5 billion fraud at the bankrupt mortgage lender … Continued

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IRS Whistleblower Program Paid More than $103M to Whistleblowers in FY2015

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Experienced and Effective SEC Whistleblower Lawyers

SEC Whistleblower Reward Program

Since 2012, the SEC has issued more than $1.8 billion in awards to whistleblowers, which includes awards to our clients totaling millions of dollars. Experienced and effective SEC whistleblower lawyers can provide critical guidance to whistleblowers throughout this process to protect their identities and increase the likelihood that they maximize their awards.

In matters in which we obtained SEC whistleblower awards for our clients, the public orders announcing the awards note the “significant assistance” provided to SEC staff that enabled the SEC to complete investigations more quickly.

If you have original information that you would like to report to the SEC Office of the Whistleblower, contact the Director of our SEC Whistleblower Practice at [email protected] or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential.

In conjunction with our courageous clients, our SEC whistleblower attorneys have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies, and return funds to defrauded investors.

In contrast to many other SEC whistleblower law firms, our multi-disciplinary team of SEC whistleblower lawyers includes a Certified Public Accountant and Certified Fraud Examiner with substantial experience auditing public companies and investigating complex fraud schemes. We understand the many challenges that the SEC faces in investigating our clients’ disclosures and take measures to increase the likelihood that the SEC will be able to effectively pursue the disclosures that our SEC whistleblower lawyers provide on behalf of our clients.

Under the SEC Whistleblower Reward Program, whistleblowers can submit tips anonymously to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws, including:

• Accounting fraud;
• Investment fraud;
• Ponzi schemes;
• Foreign bribery and FCPA violations;
• Cryptocurrency fraud;
• Promissory note fraud;
• EB-5 investment fraud;
• Fraudulent securities offerings;
• Improper revenue recognition;
• Inadequate internal controls;
• Deceptive non-GAAP financials;
• Manipulation of a security’s price or volume;
• Insider trading;
• Hedge fund fraud;
• Unregistered broker-dealers;
• Investment adviser fraud;
• Anti-money laundering violations;
• False or misleading statements about a company or investment;
• Violations of auditor independence rules; and
• Misleading or incomplete cybersecurity disclosures.

The SEC has jurisdiction over a wide range of industries and entities – both public and private.

Recently the Association of Certified Fraud Examiners published a profile of SEC whistleblower attorney Matthew Stock’s success working with whistleblowers to fight fraud:

Click here to hear SEC whistleblower attorney Matthew Stock’s tips for SEC whistleblowers.

SEC Whistleblower Lawyers’ Guide to SEC Whistleblower Awards

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation. For more information, see the SEC Office of the Whistleblower’s Guidance for Whistleblower Award Determinations and Approach to Processing Whistleblower Award Claims.

Since 2012, the SEC Whistleblower Office has issued more than $1.8 billion in awards to whistleblowers. The largest SEC whistleblower awards to date are $279 million, $114 million, $110 million, $104 million, and $50 million. See some of the SEC whistleblower cases that have resulted in multi-million dollar awards.

Benefits of Retaining an Effective SEC Whistleblower Attorney

The path to receiving an SEC whistleblower award is lengthy and complex. Throughout this process, an SEC whistleblower attorney can provide critical guidance to whistleblowers on a wide range of issues.

Submit Tips Anonymously

If represented by an attorney, a whistleblower may submit a tip anonymously to the SEC. In certain circumstances, a whistleblower may remain anonymous, even to the SEC, until an award determination. However, even at the time of a reward, a whistleblower’s identity is not made available to the public. An experienced SEC whistleblower lawyer will be able to skillfully guide a whistleblower through the process, maximizing the likelihood that the whistleblower’s identity is not revealed to unauthorized parties. In addition, an SEC whistleblower attorney can help protect whistleblowers who experience retaliation after disclosing fraud or other violations to their employers or the SEC.

Eligibility for an Award

Most individuals, regardless of citizenship, can become eligible to receive awards under the SEC Whistleblower Program. This includes high-level corporate insiders and compliance personnel. The eligibility analysis, however, differs depending on the whistleblower’s relation to the company and how they obtained the information. An SEC whistleblower attorney can help a whistleblower determine whether they need to take any actions prior to submitting a tip to be eligible for an award.

Moreover, even if a whistleblower has already submitted a tip to the SEC, an SEC whistleblower attorney can ensure that the whistleblower followed the required procedures to be eligible for an award. A failure to comply with these rules could render a whistleblower ineligible for an award, even if they provided original information to the SEC that led to a successful enforcement action. The SEC recently amended the rules of the program to allow whistleblowers who originally failed to comply with certain procedures to fix, or “perfect,” their SEC whistleblower tips to become eligible for awards. For example, if a whistleblower first learns of the required filing procedures after retaining an attorney in connection with their submission, the rules allow the whistleblower to submit a properly executed tip within 30 days to become eligible for an award.

A skillful eligibility analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

Increase the Likelihood That the SEC Acts on a Whistleblower’s Tip

Since 2011, the SEC Office of the Whistleblower has received more than 52,400 whistleblower tips. The SEC has limited resources and can only investigate and pursue enforcement actions for a fraction of the tips received. An experienced SEC whistleblower attorney can take certain steps to increase the likelihood that the SEC acts on a whistleblower’s tip. For example, an SEC whistleblower attorney can assist a whistleblower by investigating their case, identifying the key violations, and preparing a persuasive submission that will be more likely to cause the SEC to open an investigation.

An SEC whistleblower lawyer can also identify and address potential evidentiary issues, which frequently arise in SEC whistleblower cases. Finally, as a practical matter, the SEC is more likely to act on a whistleblower’s tip if they receive a compelling submission from an SEC whistleblower law firm that has a track record of successfully representing whistleblowers.

As noted in an annual report of the SEC OWB, “Whistleblower tips that are specific, credible, and timely, and that are accompanied by corroborating documentary evidence, are more likely to be forwarded to investigative staff for further analysis or investigation. For instance, if the tip identifies individuals involved in the misconduct, provides examples of particular fraudulent transactions, or points to non-public materials evidencing a fraud, the tip is more likely to be assigned to Enforcement staff for investigation.” 

Maximize an SEC Whistleblower Award

When determining the amount of an award, the SEC considers various factors that may increase or decrease an award percentage of between 10% and 30% of the total monetary sanctions collected. An SEC whistleblower attorney can help a whistleblower leverage these factors to maximize their award. In addition, an SEC whistleblower attorney can determine whether a whistleblower is eligible for a “related action” award, which could significantly increase the amount of an award.

Finally, if the SEC acts on a whistleblower’s information and brings a successful enforcement action in excess of $1 million, an SEC whistleblower lawyer can help prepare a detailed application for an award that makes a compelling case for a high award percentage of the total monetary sanctions collected.

Importantly, these benefits represent only a handful of the countless ways in which an SEC whistleblower attorney can assist whistleblowers before the SEC. For more information, contact the SEC whistleblower attorneys at Zuckerman Law today to schedule a free, confidential consultation.

SEC Whistleblower Lawyers’ Tips to Qualify for an SEC Whistleblower Award

For more information about the SEC whistleblower process, see the SEC’s investor bulletin on SEC investigations.

SEC Whistleblower Protection Against Retaliation

Whistleblowers are also afforded substantial protection against retaliation. Learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act and the tools that our experienced whistleblower attorneys employ to combat retaliation.

SEC Whistleblower Office: FY 2021 the Best to Date

The SEC Whistleblower Program continued its remarkable run of success in FY 2021. According to the SEC Whistleblower Office’s 2021 Annual Report to Congress, the office received more than 12,200 tips in the fiscal year. This is the largest number of whistleblower tips the office has received in one year, which represents an approximate 76% increase over FY 2020, during which the SEC received the now-second highest number of whistleblower tips in a fiscal year.

The most common SEC whistleblower tips related to manipulation (25%), corporate disclosures and financials (16%), offering fraud (16%), trading and pricing (6%), and initial coin offerings and cryptocurrencies (6%). Other notable areas of SEC whistleblower tips included insider trading, foreign bribery and other FCPA violations, and unregistered securities offerings. Since 2011, the SEC Whistleblower Office has received more than 52,400 tips that have enabled the SEC to obtain orders for nearly $5 billion in total monetary sanctions, including more than $3.1 billion in disgorgement of ill-gotten gains and interest, of which more than $1.3 billion has been, or is scheduled to be, returned to harmed investors.

Consistent with prior years, the states that yielded the highest number of tips in FY 2021 were California, Maryland, Florida, New York, and Texas. The SEC Whistleblower Office also received whistleblower tips from 99 countries outside of the United States in FY 2021. The highest number of tips were from whistleblowers in Canada, the United Kingdom, and the People’s Republic of China.

Notably, whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards and the SEC whistleblower attorneys at Zuckerman Law can represent SEC whistleblowers from any state or country. According to the 2017 Corruption Perceptions Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with PwC’s 2018 fraud survey, which reported the highest fraud levels in organizations in the past 20 years, and the ACFE’s 2021 fraud survey, which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

The annual report also indicates that the SEC Whistleblower Program is gaining momentum. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

• In FY 2015, the SEC issued $37 million in awards to whistleblowers.
• In FY 2016, the SEC issued $57 million in awards to whistleblowers.
• In FY 2017, the SEC issued $50 million in awards to whistleblowers.
• In FY 2018, the SEC issued $168 million in awards to whistleblowers.
• In FY 2019, the SEC issued $60 million in awards to whistleblowers.
• In FY 2020, the SEC issued $175 million in awards to whistleblowers.
• In FY 2021, the SEC issued $564 million in awards to whistleblowers.
• In FY 2022, the SEC issued $229 million in awards to whistleblowers.

Largest SEC Whistleblower Awards

Since the inception of the SEC Whistleblower Program, whistleblower tips have enabled the SEC to order more than $3.5 billion in monetary sanctions against wrongdoers. The table below identifies some of the largest SEC whistleblower awards that the SEC has issued:

SEC Whistleblower Law Firm: Top FAQs

The SEC whistleblower process is lengthy and complex. See below for articles by our firm’s SEC whistleblower lawyers responding to frequently asked questions by SEC whistleblowers.

1. What is the SEC Whistleblower Program?
2. What is the SEC Office of the Whistleblower?
3. What are the largest SEC whistleblower awards?
4. Can I submit a tip anonymously to the SEC Office of the Whistleblower?
5. What exactly does anonymous whistleblowing entail?
6. How can I perfect my SEC whistleblower tip to qualify for an award?
7. What employment protections are available for SEC whistleblowers?
8. What violations qualify for an SEC whistleblower award?
9. Can the SEC bring enforcement actions against international schemes?
10. Who is an “eligible” SEC whistleblower?
11. Can compliance personnel, auditors, officers or directors qualify for SEC whistleblower awards?
12. Can I submit a tip to the SEC if I had some involvement in the fraud or misconduct?
13. Can culpable whistleblowers qualify for SEC whistleblower awards?
14. Do I have to report a potential violation to my company before reporting it to the SEC?
15. What type of evidence should I provide to the SEC?
16. Can I use confidential company documents to expose fraud?
17. Can I disclose secret recordings to the SEC?
18. Can I submit a tip if I agreed to a confidentiality provision in an employment/severance agreement?
19. When is the best time to report the fraud or misconduct to the SEC?
20. What is “original information”?
21. Can I submit an SEC Whistleblower claim if the SEC already has an open investigation into the matter?
22. How might my information “lead to” a successful SEC enforcement action?
23. What “related actions” qualify for an SEC whistleblower award?
24. How do the best SEC whistleblower law firms advocate for whistleblowers?
25. How do I choose the best whistleblower attorney?
26. Why should I choose the Zuckerman Law to represent me in my SEC whistleblower claim?
27. How do I submit a tip to the SEC Office of the Whistleblower?
28. What happens after I submit a tip to the SEC Office of the Whistleblower?
29. What is the full process for a whistleblower to receive an award?  
30. What factors does the SEC consider when determining the amount of the award?
31. What happens after I apply for an SEC whistleblower award?
32. What is the process to appeal the SEC’s award determination?
33. How long does it take to receive an SEC whistleblower award?

SEC Whistleblower Attorneys’ Tips to Navigate SEC Whistleblower Program’s Process

As discussed in our articles, the SEC Whistleblower Program has become a very effective enforcement tool for the SEC.  But very few whistleblowers have received awards, which underscores the importance of having experienced counsel represent a whistleblower effectively at the SEC.

• MarketWatch: More than 33,000 tips, $2.5 billion in financial remedies and $500 million in awards to investors — the SEC’s whistleblower program turns 10 years old today
• Going Concern: Here Are 6 Reasons Why the SEC Whistleblower Program Is Successful
• National Law Review: 5 Ways that Experienced SEC Whistleblower Law Firms Can Effectively Advocate for Whistleblowers
• D&O Diary: How the SEC Whistleblower Program Has Changed Corporate Compliance and SEC Enforcement
• Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective

Top-Rated SEC Whistleblower Lawyers

We have assembled a team of leading SEC whistleblower lawyers to provide top-notch representation to SEC whistleblowers.  Washingtonian magazine named two of our attorneys top whistleblower lawyers. U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 Law Firm in the Washington D.C. metropolitan area.

• Matt Stock is a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.  As an auditor, Stock developed an expertise in financial statement analysis and internal controls testing and fraud recognition.  He uses his auditing experience to help SEC whistleblowers investigate and disclose complex financial frauds to the government and develop a roadmap for the SEC to take an enforcement action.  Matt has been interviewed on CNBC, quoted extensively about whistleblower rewards in the media, and is the lead author of SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.
• Dallas Hammer has extensive experience representing whistleblowers in retaliation and rewards claims and has written extensively about cybersecurity whistleblowing. He was selected by his peers to be included in The Best Lawyers in America® in the category of employment law in 2021 and 2022.
• Described by the National Law Journal as a “leading whistleblower attorney,” founding Principal Jason Zuckerman has established precedent under a wide range of whistleblower protection laws and obtained substantial compensation for his clients and recoveries for the government in whistleblower rewards and whistleblower retaliation cases.  He served on the Department of Labor’s Whistleblower Protection Advisory Committee, which makes recommendations to the Secretary of Labor to improve OSHA’s administration of federal whistleblower protection laws.  Zuckerman also served as Senior Legal Advisor to the Special Counsel at the U.S. Office of Special Counsel, the federal agency charged with protecting whistleblowers in the federal government.  At OSC, he oversaw investigations of whistleblower claims and obtained corrective action or relief for whistleblowers.
• Zuckerman was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” (2020, 2018, 2017, 2015, 2009, and 2007), selected by his peers to be included in The Best Lawyers in America® in the category of employment law (2011-2021) and in SuperLawyers in the category of labor and employment law (2012 and 2015-2021), is rated 10 out of 10 by Avvo, based largely on client reviews, and is rated AV Preeminent® by Martindale-Hubbell based on peer reviews
• We have published extensively on whistleblower rights and protections, and speak nationwide at seminars and continuing legal education conferences.  We blog about new developments under whistleblower retaliation and rewards laws at the Whistleblower Protection Law and SEC Awards Blog, and in 2019, the National Law Review awarded Zuckerman its “Go-To Thought Leadership Award” for his analysis of developments in whistleblower law.
• Our attorneys have been quoted by and published articles in leading business, accounting, and legal periodicals about the SEC whistleblower program, including articles in The Wall Street Journal, Forbes, CNBC, MarketWatch, Vox, Accounting Today, Going Concern, Law360 – Expert Analysis, Investopedia, The National Law Review, inSecurities, Government Accountability Project, S&P Global Market Intelligence, Risk & Compliance Magazine, The D&O Diary, The Compliance and Ethics Blog, Compliance Week and other printed and electronic media.

SEC Whistleblower Office Annual Reports

The SEC Whistleblower Office provides an Annual Report to Congress on the SEC Whistleblower Program. See below for the annual reports:

• 2011 Annual Report to Congress on the SEC Whistleblower Program
• 2012 Annual Report to Congress on the SEC Whistleblower Program
• 2013 Annual Report to Congress on the SEC Whistleblower Program
• 2014 Annual Report to Congress on the SEC Whistleblower Program
• 2015 Annual Report to Congress on the SEC Whistleblower Program
• 2016 Annual Report to Congress on the SEC Whistleblower Program
• 2017 Annual Report to Congress on the SEC Whistleblower Program
• 2018 Annual Report to Congress on the SEC Whistleblower Program
• 2019 Annual Report to Congress on the SEC Whistleblower Program
• 2020 Annual Report to Congress on the SEC Whistleblower Program
• 2021 Annual Report to Congress on the SEC Whistleblower Program

SEC Areas of Enforcement

According to the FY 2021 report of the SEC Office of the Whistleblower, the most common allegation types reported by SEC whistleblowers relate to:

• Manipulation;
• Corporate disclosures and financials;
• Offering fraud;
• Trading and pricing;
• Initial coin offerings and cryptocurrencies;
• Insider trading;
• Foreign bribery and other FCPA violations; and
• Unregistered securities offerings.

Resources for SEC Whistleblowers from Experienced and Effective SEC Whistleblower Lawyers

For more information about the SEC Whistleblower Program, see the following resources:

• Tips for SEC Whistleblowers
• Leading SEC Whistleblower Law Firm Featured in Article About Growing Wave of Whistleblower Lawsuits
• SEC Whistleblower Reward Program FAQ
• Auditors’ and accountants’ guide to SEC whistleblower awards
• Whistleblower Protections and Incentives for Auditors and Accountants
• How to Report EB-5 Fraud and Earn an SEC Whistleblower Award
• CFTC Strengthens Anti-Retaliation Protections for Whistleblowers and Improves CFTC Whistleblower Award Program
• SEC Cracking Down on Ponzi Schemes
• SEC Scrutinizes “Fake News” Stock Promotion Schemes
• SEC Whistleblower Program: Exposing Insider Trading
• SEC Awards for Disclosures of Foreign Bribery or FCPA Violations
• Whistleblower Rewards and Bounties for Disclosures of Market Manipulation Schemes
• SEC Targeting Investment Adviser Fraud
• Compliance Personnel, Auditors, Officers and Directors Can Obtain SEC Whistleblower Awards
• Money Laundering and the SEC Whistleblower Program
• International Whistleblower Representation – SEC Whistleblower Attorney
• Anonymous Whistleblowing: Does the SEC Whistleblower Program Protect a Whistleblower’s Identity?
• SEC Awards for Disclosures of Foreign Bribery or FCPA Violations
• Securities Fraud Enforcement Action Prompts the Question: What Was the Company Smoking?
• Compliance Officer Whistleblower Representation
• SEC Whistleblower Program: What is the SEC Form TCR?
• Tale of Two Whistleblowers: Lessons Learned from Today’s SEC Whistleblower Award
• Whistleblowers Help CFTC Obtain Record Penalties for Commodities Fraud
• Report Underscores Importance of Whistleblower Rewards and Protections for Internal Auditors
• SEC Sanctions: Whistleblower Reference Guide
• Protections and Rewards for Cybersecurity Whistleblowers
• CFTC Announces Second Whistleblower Award in 2016 as the Agency’s Whistleblower Reward Program Picks Up Steam
• EB-5 Visa Scandal Underscores the Critical Role Whistleblowers Play in Exposing EB-5 Fraud
• SEC Enforcement Director Touts Success of SEC Whistleblower Program
• SEC Whistleblower Program Not Limited to Corporate Insiders
• SEC Pays $3M Award to Whistleblower
• SEC Draft Strategic Plan Affirms the Importance of the SEC’s Whistleblower Reward Program
• Whistleblower Lawyer Interviewed About SEC Whistleblower Award
• SEC Whistleblower Lawyer Quoted in National Law Journal About SEC Whistleblower Program
• SEC Whistleblower Lawyer Zuckerman Quoted About SEC Whistleblower Award for Independent Analysis
• SEC Whistleblower Lawyer Jason Zuckerman Quoted About Tips for SEC Whistleblowers
• Whistleblower Lawyer Jason Zuckerman Quoted About SEC Whistleblower Award
• Whistleblower Lawyer Interviewed About the Rise of Cybersecurity Whistleblowing
• Whistleblower Attorney Zuckerman Quoted in Washington Post About SEC Order
• Whistleblower Attorney Dallas Hammer Interviewed by Bloomberg About Dodd-Frank Protected Whistleblowing
• SEC Whistleblower Lawyer Zuckerman Quoted About SEC Whistleblower Award for Independent Analysis
• SEC Office of the Whistleblower Resources

Tax Fraud Whistleblower Reward Lawyers

To discuss potential representation in a tax fraud whistleblower reward case with amounts in dispute in excess of $2 million, click here or contact the Director of our IRS whistleblower practice, Matthew Stock, at [email protected] or (202) 930-5901 for a free confidential consultation.

Matthew Stock, an attorney, Certified Public Accountant (CPA) and Certified Fraud Examiner (CFE), is routinely quoted in the media about whistleblower rewards programs.  Recently, BNA interviewed Stock about IRS whistleblower rewards.

IRS Whistleblower Reward Program

The IRS estimates that the United States loses more than $688 billion per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under 26 USC § 7623(b), the IRS is required to issue an award to tax whistleblowers of 15% to 30% of proceeds collected from tax fraud or tax underpayments if:

• the whistleblower provides a tip that the IRS decides to take action on (a whistleblower cannot force the IRS to act on a tip);
• the amount in dispute (the tax underpayment, including interest and penalties) exceeds $2 million (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the  tax years in question); and
• the IRS collects tax underpayments resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on large-scale tax fraud in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, significant protections against retaliation. Read more about the tax whistleblower protection law here.

IRS Whistleblower Reward Program’s Success

Since 2007, the IRS Whistleblower Office has issued more than $931 million in awards to tax whistleblowers based on the collection of $5.7 billion in proceeds. During FY 2018 and FY 2019, the IRS awarded more than $430 million to tax fraud whistleblowers, and whistleblowers enabled the IRS to recover more than $2 billion. See the FY 2018 report of the IRS Whistleblower Program and the FY 2019 report of the IRS Whistleblower Program.

A denial of an award or reduction of up to 10% may be made in cases where the information provided to the IRS is:

• brought by an individual who “planned and initiated” the actions that led to the underpayment of tax.
• based on information derived from a judicial or administrative hearing; a governmental report, hearing, audit, or investigation; or the news media.

Tax whistleblower awards are subject to appeal to the U.S. Tax Court within 30 days of an IRS determination. For additional information on the process, click here.

If a tax whistleblower case does not meet the $2 million threshold (or cases involving individual taxpayers with gross income of less than $200,000), a whistleblower award may still pursue an award under section 7623(a). Under this section, the IRS may issue a discretionary award to a whistleblower for tips that lead to “detecting underpayments of tax, or bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same.” The awards under this program are a maximum of 15% of the proceeds collected, capped at $10 million. It should be stressed that awards under this program are discretionary, whereas awards under 7623(b) are mandatory.

IRS Whistleblower Awards Attorneys

Since the inception of the IRS Whistleblower Program, the IRS has issued more than $931 million in awards to whistleblowers. Since FY 2012, the IRS issued more than $841 million in awards:

• In FY 2019, the IRS issued 181 awards, totaling more than $102 million;
• In FY 2018, the IRS issued 217 awards, totaling more than $312 million;
• In FY 2017, the IRS issued 242 awards, totaling more than $33 million;
• In FY 2016, the IRS issued 418 awards, totaling more than $61 million;
• In FY 2015, the IRS issued 99 awards, totaling more than $103 million;
• In FY 2014, the IRS issued 101 awards, totaling more than $52 million dollars;
• In FY 2013, the IRS issued 122 awards, totaling more than $53 million dollars; and
• In FY 2012, the IRS made 128 awards, totaling more than $125 million dollars.

Notable successes of the IRS Whistleblower Program include:

• Bradley Birkenfeld was awarded $104 million after blowing the whistle on the Swiss Bank, UBS, for helping wealthy Americans hide their assets and evade taxes.
• An unidentified whistleblower received $38 million for exposing a corporate tax avoidance scheme.
• In Whistleblower 21276-13W v. CIR, two whistleblowers were issued an award for more than $17.5 million.  Importantly, the Tax Court’s Final Order confirmed that when the IRS determines an award based on “collected proceeds,” this encompasses all dollars collected by the U.S. government, including criminal penalties, FBAR, etc.
• An unidentified accountant received $4.5 million after discovering a $20 million-plus tax liability at a Fortune 500 company. The accountant reported the liability and was subsequently ignored by the company.
• Wall Street insider nets a $2 million reward after exposing an alleged tax avoidance scheme by manufacturer Illinois Tools Works. This was the third seven-figure reward from the IRS for the anonymous whistleblower.

IRS Whistleblower Process

The IRS Whistleblower Office has recently released Publication 5251 – The Whistleblower Claim Process.  The new publication provides general guidance on the tax whistleblower program and clarity on the types of information whistleblowers should provide to the office.  In addition, the publication explores what happens to claims after the IRS receives them, communication with the IRS after a submission, and a process timeline for claims.

Eligibility for Tax Whistleblower Reward

Under the new tax whistleblower statute, the IRS is required to issue a reward to tax whistleblowers of between 15% and 30% of collected proceeds from tax fraud or tax underpayments if:

• the whistleblower provides specific and credible information that the IRS decides to take action on (a whistleblower cannot force the IRS to act on a tip);
• the information relates to tax underpayments of over $2 million (or if the subject of the claim is an individual, his or her gross income must exceed $200,000 for at least one of the  tax years in question); and
• the IRS collects tax underpayments resulting from the action (including any related actions).

In the publication, the IRS outlines the types of “specific and credible” information that whistleblowers should provide when submitting a tip. This includes:

• A description of the amounts due, including a written narrative explaining the issue(s);
• Information to support the narrative;
• A description of the documents or supporting evidence not in the whistleblower’s possession or control; and
• An explanation of how the whistleblower obtained the information and if there is any relationship to the subject of the claim.

It is important for tax whistleblowers to provide the best information available as it may support the increase of a reward percentage (among other factors).

Submitting a Whistleblower Tip to the IRS

Once a whistleblower submits a tip, the Whistleblower Office will determine if it has merit, and then forward the tip to the appropriate operating division for further development.  The publication notes this initial review generally takes 30-90 days and the Subject Matter Experts (SME) examination will take an additional 90 days.  During the SME’s examination, the whistleblower may be contacted to make sure that the IRS fully understands the information submitted by the whistleblower.

Thereafter, if the IRS does not pursue the claim, the agency will send the whistleblower a claim denial letter.  Alternatively, if the IRS decides to pursue the claim, whistleblowers are able to receive updates from the IRS concerning the progress of the investigation. Under the Taxpayer’s First Act, which was enacted on July 1, 2019:

The Secretary shall disclose to an individual providing information relating to any purpose described in paragraph (1) or (2) of section 7623(a) the following:

(i) Not later than 60 days after a case for which the individual has provided information has been referred for an audit or examination, a notice with respect to such referral.

(ii) Not later than 60 days after a taxpayer with respect to whom the individual has provided information has made a payment of tax with respect to tax liability to which such information relates, a notice with respect to such payment.

(iii) Subject to such requirements and conditions as are prescribed by the Secretary, upon a written request by such individual—

(I) information on the status and stage of any investigation or action related to such information, and

(II) in the case of a determination of the amount of any award under section 7623(b), the reasons for such determination. Clause (iii) shall not apply to any information if the Secretary determines that disclosure of such information would seriously impair Federal tax administration. Information described in clauses (i), (ii), and (iii) may be disclosed to a designee of the individual providing such information in accordance with guidance provided by the Secretary.

Information About the IRS Whistleblower Program

Whistleblower protections for accountants and tax professionals bolstered by new law

Can tax whistleblowers remain anonymous?

Are whistleblowers protected against retaliation for disclosing tax fraud?

IRS Whistleblower Office Issues New Guidance on IRS Whistleblower Reward Process

IRS Whistleblower Office Calls on Congress to Protect Whistleblowers

Audit Reveals IRS Whistleblower Program Needs Improvements

IRS Whistleblower Program Paid More than $103M to Whistleblowers in FY2015

IRS Whistleblower Lawyers: Hire a Leading Whistleblower Law Firm

The whistleblower lawyers at Zuckerman Law have experience representing whistleblowers before the IRS and one of our attorneys is also a Certified Public Accountant and Certified Fraud Examiner.  We are a leading whistleblower law firm and two of our attorneys were named top whistleblower lawyers in Washingtonian magazine.

U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 firm in Litigation – Labor and Employment in the Washington DC metropolitan area.  Matthew Stock, the Director of the Whistleblower Rewards Practice at Zuckerman Law, has been quoted in leading publications about the IRS whistleblower program, including in Bloomberg BNA.

To discuss potential representation in a tax fraud whistleblower case with amounts in dispute of more than $2 million, click here or call us at (202) 930-5901.

What is the process to obtain an IRS whistleblower reward?

Whistleblower Rewards and Bounties

The whistleblower rewards attorneys at leading whistleblower law firm Zuckerman Law represent whistleblowers worldwide under various whistleblower reward programs, including the following:

• SEC whistleblower reward program;
• CFTC whistleblower reward program;
• IRS tax fraud whistleblower reward program; and
• Anti-Money Laundering whistleblower reward program.

The firm has successfully represented whistleblowers under the SEC Whistleblower Program and the qui tam provisions of the False Claims Act. Our clients’ SEC whistleblower tips have helped the SEC halt more than $1 billion in fraudulent investment schemes.

For more information about the SEC, CFTC, and IRS whistleblower reward programs, contact an experienced whistleblower rewards attorney at Zuckerman Law today for a free and confidential case review at (202) 930-5901 or (202) 262-8959.

Click here to read reviews and testimonials from whistleblower clients, including CEOs, CFOs, and other corporate executives.

Recently the Association of Certified Fraud Examiners published a profile of Matt Stock’s success fighting fraud:

SEC Whistleblower Reward Program

The SEC Whistleblower Reward Program provides whistleblowers with a strong monetary incentive, as well as substantial protections, for reporting wrongdoing to the SEC, including the following violations of federal securities laws:

• Accounting fraud;
• Investment and securities fraud;
• Insider trading;
• Foreign bribery and other FCPA violations;
• EB-5 investment fraud;
• Manipulation of a security’s price or volume;
• Fraudulent securities offerings and Ponzi schemes;
• Unregistered securities offerings;
• Investment adviser fraud;
• False or misleading statements about a company or investment;
• Inadequate internal controls;
• Deceptive non-GAAP financial measures; and
• Violations of auditor independence rules.

Zuckerman Law also represents whistleblowers in whistleblower retaliation claims including claims brought under the whistleblower protection provisions of the Sarbanes-Oxley Act and similar whistleblower protection laws.

For more information about the SEC Whistleblower Program, download our free ebook SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award and see the following resources below.

Tips for SEC Whistleblowers to Qualify for an SEC Whistleblower Award

As discussed in our articles, the SEC whistleblower program has become a very effective enforcement tool for the SEC.  But very few whistleblowers have received awards, which underscores the importance of having experienced counsel represent a whistleblower effectively at the SEC.

• MarketWatch: More than 33,000 tips, $2.5 billion in financial remedies and $500 million in awards to investors — the SEC’s whistleblower program turns 10 years old today
• Going Concern: Here Are 6 Reasons Why the SEC Whistleblower Program Is Successful
• National Law Review: 5 Ways that Experienced SEC Whistleblower Law Firms Can Effectively Advocate for Whistleblowers
• D&O Diary: How the SEC Whistleblower Program Has Changed Corporate Compliance and SEC Enforcement
• Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective

Anti-Money Laundering (AML) Whistleblower Rewards Attorneys

Guide to Anti-Money Laundering Act Whistleblower Rewards and Protections

SEC Whistleblower Attorneys’ Tips to Successfully Navigate SEC Whistleblower Process

Whistleblower Bounties

Top-Rated Whistleblower Rewards Attorneys

We have assembled a team of leading whistleblower rewards lawyers to provide top-notch representation to whistleblowers.  Let us put our unique experience and credentials to work for you:

• U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 firm in Litigation – Labor and Employment in the Washington DC metropolitan area.
• Matt Stock is a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.  As an auditor, Stock developed an expertise in financial statement analysis and internal controls testing and fraud recognition.  He uses his auditing experience to help IRS, CFTC and SEC whistleblowers investigate and disclose complex financial frauds to the government and develop a roadmap for the SEC to take an enforcement action.  Matt has been interviewed on CNBC, quoted extensively about whistleblower rewards in the media, and is the lead author of SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.
• Dallas Hammer has extensive experience representing whistleblowers in retaliation and rewards claims and has written extensively about cybersecurity whistleblowing. He was selected by his peers to be included in The Best Lawyers in America® in the category of employment law in 2021 and 2022.
• Described by the National Law Journal as a “leading whistleblower attorney,” founding Principal Jason Zuckerman has established precedent under a wide range of whistleblower protection laws and obtained substantial compensation for his clients and recoveries for the government in whistleblower rewards and whistleblower retaliation cases.  He served on the Department of Labor’s Whistleblower Protection Advisory Committee, which makes recommendations to the Secretary of Labor to improve OSHA’s administration of federal whistleblower protection laws.  Zuckerman also served as Senior Legal Advisor to the Special Counsel at the U.S. Office of Special Counsel, the federal agency charged with protecting whistleblowers in the federal government.  At OSC, he oversaw investigations of whistleblower claims and obtained corrective action or relief for whistleblowers.
• Zuckerman was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” (2020, 2018, 2017, 2015, 2009, and 2007), selected by his peers to be included in The Best Lawyers in America® in the category of employment law (2011-2021) and in SuperLawyers in the category of labor and employment law (2012 and 2015-2021), is rated 10 out of 10 by Avvo, based largely on client reviews, and is rated AV Preeminent® by Martindale-Hubbell based on peer reviews
• We have published extensively on whistleblower rights and protections, and speak nationwide at seminars and continuing legal education conferences.  We blog about new developments under whistleblower retaliation and rewards laws at the Whistleblower Protection Law and SEC Awards Blog, and in 2019, the National Law Review awarded Zuckerman its “Go-To Thought Leadership Award” for his analysis of developments in whistleblower law.
• Our attorneys have been quoted by and published articles in leading business, accounting, and legal periodicals, including The Wall Street Journal, Forbes, CNBC, MarketWatch, Vox, Accounting Today, Going Concern, Law360 – Expert Analysis, Investopedia, The National Law Review, inSecurities, Government Accountability Project, S&P Global Market Intelligence, Risk & Compliance Magazine, The D&O Diary, The Compliance and Ethics Blog, Compliance Week and other printed and electronic media.

Whistleblower Protections for SEC Whistleblowers

AML Whistleblower Lawyers’ Expert Analysis About AML Whistleblower Reward Program

Resources About Whistleblower Rewards and Bounties

• Tips for SEC Whistleblowers
• Leading SEC Whistleblower Law Firm Featured in Article About Growing Wave of Whistleblower Lawsuits
• SEC Whistleblower Reward Program FAQ
• Auditors’ and accountants’ guide to SEC whistleblower awards
• Whistleblower Protections and Incentives for Auditors and Accountants
• How to Report EB-5 Fraud and Earn an SEC Whistleblower Award
• CFTC Strengthens Anti-Retaliation Protections for Whistleblowers and Improves CFTC Whistleblower Award Program
• SEC Cracking Down on Ponzi Schemes
• SEC Scrutinizes “Fake News” Stock Promotion Schemes
• SEC Whistleblower Program: Exposing Insider Trading
• SEC Awards for Disclosures of Foreign Bribery or FCPA Violations
• Whistleblower Rewards and Bounties for Disclosures of Market Manipulation Schemes
• SEC Targeting Investment Adviser Fraud
• Compliance Personnel, Auditors, Officers and Directors Can Obtain SEC Whistleblower Awards
• Money Laundering and the SEC Whistleblower Program
• International Whistleblower Representation – SEC Whistleblower Attorney
• Anonymous Whistleblowing: Does the SEC Whistleblower Program Protect a Whistleblower’s Identity?
• SEC Awards for Disclosures of Foreign Bribery or FCPA Violations
• Securities Fraud Enforcement Action Prompts the Question: What Was the Company Smoking?
• Compliance Officer Whistleblower Representation
• SEC Whistleblower Program: What is the SEC Form TCR?
• Tale of Two Whistleblowers: Lessons Learned from Today’s SEC Whistleblower Award
• Whistleblowers Help CFTC Obtain Record Penalties for Commodities Fraud
• Report Underscores Importance of Whistleblower Rewards and Protections for Internal Auditors
• SEC Sanctions: Whistleblower Reference Guide
• Protections and Rewards for Cybersecurity Whistleblowers
• CFTC Announces Second Whistleblower Award in 2016 as the Agency’s Whistleblower Reward Program Picks Up Steam
• EB-5 Visa Scandal Underscores the Critical Role Whistleblowers Play in Exposing EB-5 Fraud
• SEC Enforcement Director Touts Success of SEC Whistleblower Program
• SEC Whistleblower Program Not Limited to Corporate Insiders
• SEC Pays $3M Award to Whistleblower
• SEC Draft Strategic Plan Affirms the Importance of the SEC’s Whistleblower Reward Program
• Whistleblower Lawyer Interviewed About SEC Whistleblower Award
• Wall Street Journal Quotes Jason Zuckerman on Dodd-Frank SEC Regulations
• SEC Whistleblower Lawyer Quoted in National Law Journal About SEC Whistleblower Program
• SEC Whistleblower Lawyer Zuckerman Quoted About SEC Whistleblower Award for Independent Analysis
• SEC Whistleblower Lawyer Jason Zuckerman Quoted About Tips for SEC Whistleblowers
• Whistleblower Lawyer Jason Zuckerman Quoted About SEC Whistleblower Award
• Whistleblower Lawyer Interviewed About the Rise of Cybersecurity Whistleblowing
• Whistleblower Attorney Zuckerman Quoted in Washington Post About SEC Order
• Whistleblower Attorney Dallas Hammer Interviewed by Bloomberg About Dodd-Frank Protected Whistleblowing
• SEC Whistleblower Lawyer Zuckerman Quoted About SEC Whistleblower Award for Independent Analysis
• Audit committees need to dig into personal relationships
• Whistleblower Bounties Pose Challenges
• CFO Magazine Quotes Whistleblower Attorney Jason Zuckerman About Dodd-Frank Whistleblower Rules
• Fiscal Times Quotes Jason Zuckerman About Dodd-Frank Act Whistleblower Reward Provisions
• Whistleblower Attorney Jason Zuckerman Quoted About Battle Over Corporate Whistleblower Rules

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