SEC Whistleblower Reward Program
In July 2010, the Dodd-Frank Wall Street Reform and Protection Act (Dodd-Frank) created the SEC Whistleblower Reward Program. It provides whistleblowers with a strong monetary incentive to report 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;
- Hedge fund fraud;
- Unregistered securities offerings;
- Investment adviser fraud;
- Broker-dealer anti-money laundering program violations;
- False or misleading statements about a company or investment;
- Inadequate internal controls;
- Deceptive non-GAAP financial measures; and
- Violations of auditor independence rules.
The SEC has jurisdiction over a wide range of industries and entities – both public and private. 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. Click here or call us today at 202-262-8959.
SEC Whistleblower Awards
Under the 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. A whistleblower may receive an award of between 10-30 percent of the amount collected.
Original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.
In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors may 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. Since the law went into effect, the SEC Whistleblower Office has awarded more than $154 million to whistleblowers. The largest award to date is more than $30 million.
Anonymous Reporting with SEC Attorney
If represented by counsel, a whistleblower may submit a tip anonymously to the SEC. In certain circumstances, a whistleblower may remain anonymous, even to the SEC, until a reward is issued. 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 you through the process, maximizing the likelihood that your identity is not revealed to unauthorized parties.
Protection Against Whistleblower Retaliation
Whistleblowers are also afforded substantial protection against retaliation. Specifically, an employer may not “discharge, demote, suspend, threaten, harass, directly or indirectly, or in any manner discriminates against, a whistleblower” for legally reporting wrongdoing to the SEC. Relief or damages for retaliation includes reinstatement, double backpay, and litigation costs and reasonable attorneys’ fees.
SEC Whistleblower Office: FY2016 the Best to Date
According to the SEC Whistleblower Office’s 2016 Annual Report to Congress, the office received more than 4,200 tips in FY2016. This is the most tips the office has received in one year. The majority of tips related to corporate disclosures and financials, offering fraud and market manipulation. Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery, unregistered offerings, municipal securities and public pensions.
The states that yielded the highest number of tips in FY 2016 were California, New York, Florida, Ohio, Texas, Washington, Illinois, and New Jersey. States reporting more than sixty tips were Arizona, Michigan, Pennsylvania, Virginia and North Carolina. The SEC Whistleblower Office also received tips from 67 foreign countries in FY 2016. The highest number of tips were from whistleblowers in Canada, the United Kingdom, and Australia. Notably, whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards and the attorneys at Zuckerman Law can represent SEC whistleblowers from any state or country.
Since 2011, the SEC Whistleblower Office has issued more than $158 million in awards to whistleblowers. In FY 2016, the office issued over $57 million in awards to whistleblowers, including six of the ten largest whistleblower awards in the program’s history. In the first half of FY 2017, the SEC has filed virtually the same number of enforcement actions, compared to the same period in the previous fiscal year. Thus, despite any uncertainty introduced by changes in SEC leadership and the new administration, whistleblowers should expect the SEC Whistleblower Office to continue its trend of increased SEC awards in the coming years.
Largest SEC Whistleblower Awards
The table below identifies some of the largest awards that the SEC has issued to whistleblowers:
|Whistleblower Award||Date||Basis for Whistleblower Award|
|$30 million||September 22, 2014||A foreign whistleblower came to the SEC with “information about an ongoing fraud that would have been very difficult to detect.”
This award underscores that non-US citizens are eligible whistleblowers in the SEC Whistleblower Program.
|$22 million||August 30, 2016||A former financial executive at Monsanto exposed weaknesses in the company’s internal controls that failed to account for millions of dollars in rebates. Monsanto agreed to settle the allegations of accounting fraud for $80 million.
Importantly, external auditors, internal auditors, accountants and other compliance personnel may be eligible for awards under the SEC Whistleblower Program. Indeed, they are often best positioned to discover wrongdoing.
|$20 million||November 14, 2016||According to the SEC's order determining the whistleblower awards, three whistleblowers applied for awards related to the enforcement action. The SEC denied two of the whistleblowers' applications because they did not provide "original information," and issued the full $20 million award to one whistleblower.|
|$17 million||June 9, 2016||A company insider “substantially advanced the agency’s investigation and ultimate enforcement action.”
This award highlights that whistleblowers may receive an award if they provide original information regarding an open SEC investigation if it significantly contributes to the success of the action.
|$14 million||September 30, 2013||The whistleblower exposed a fraudulent offering that targeted foreign investors who sought to gain a legal pathway to citizenship through the EB-5 Immigrant Investor Program.
Recently, there has been rise in EB-5 investment fraud. Click here to read more about how to report EB-5 fraud and earn an award.
|$7 million||January 23, 2017||Three whistleblowers split an award of more than $7 million after helping the SEC prosecute an investment scheme.
One whistleblower provided information that was the primary reason that the SEC opened an investigation. That whistleblower received a more than $4 million award. Two other whistleblowers jointly provided new information during the SEC’s investigation that significantly contributed to the success of the SEC’s enforcement action. Those two whistleblowers will split more than $3 million.
|$5.5 million||January 6, 2017||An anonymous whistleblower orally provided the SEC with critical information about ongoing securities fraud. Generally, the SEC requires that whistleblower provide information “in writing.” However, the SEC waived that requirement in this case due to “highly unusual circumstances” and awarded the whistleblower more than $5.5 million for the information.
This award marks the third time that the SEC has deemed it appropriate to waive a procedural requirement. The most recent exception occurred on July 27, 2017, when the SEC issued a $1.7 million whistleblower award to an insider who failed to comply with all of the whistleblower program's rules and had some culpability in the fraud. The former chief of the SEC whistleblower office said that these awards underscore the SEC’s discretionary authority to do what justice requires.
|$5 million||May 17,2016||A former company insider’s detailed tip led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information. The SEC's press release noted that employees are often best positioned to witness wrongdoing.
|$4 million||April 25, 2017||The SEC issued the $4 million award to an anonymous whistleblower who provided information that led another governmental authority (not the SEC) to a successful enforcement action resulting in significant monetary sanctions.
This award highlights that SEC whistleblowers are still eligible for an award when they provide information to the SEC that leads other governmental authorities to successful enforcement actions resulting in monetary proceeds in excess of $1 million.
|$4 million||September 30, 2016||The SEC issued the award to an anonymous whistleblower for “alter[ing] the agency to a fraud.”
The lack of publicly available information about the anonymous whistleblower and the enforcement action underscores how serious the SEC is about protecting whistleblower's. Under the program, whistleblower may report anonymously through an SEC whistleblower attorney.
|$3.5 million||May 13, 2016||The whistleblower “bolstered an ongoing investigation with additional evidence of wrongdoing” which helped the SEC during settlement discussions with the company.
This award underscores how whistleblowers may still receive an award even if the SEC already has an open investigation into a matter.
|$3.5 million||December 5, 2016||A whistleblower received an award of $3.5 million for providing original information to the SEC that led to a successful enforcement action. The press release states: "Whistleblowers do a tremendous service to the investing public and we will continue to reward those who come forward with valuable tips that help us bring successful cases against those who violate the securities laws."|
SEC Whistleblower Lawyers: Top FAQs
- What is the SEC Whistleblower Program?
- What violations qualify for an SEC whistleblower award?
- How can I submit a tip to the SEC?
- Why should I choose the Zuckerman Law to represent me in my SEC whistleblower claim?
- Can I submit an anonymous tip to the SEC Whistleblower Office?
- When is the best time to report the fraud or misconduct to the SEC?
- Can I submit an SEC Whistleblower claim if the SEC already has an open investigation into the matter?
- Who is an “eligible” SEC whistleblower?
- Can compliance personnel, auditors, officers or directors qualify for an SEC whistleblower award?
- What is “original information”?
- How might my information “lead to” a successful SEC enforcement action?
- Can I submit a claim if I had involvement in the fraud or misconduct?
- Do I have to report a securities law violation to my company before reporting the violation to the SEC?
- Can I submit a tip if I agreed to a confidentiality provision in an employment/severance agreement?
- What factors does the SEC consider when determining the amount of the award?
- What employment protections are available for SEC whistleblowers?
- What type of evidence should I provide to the SEC?
- Can I disclose secret recordings to the SEC?
- What happens after I submit a tip to the SEC?
- How long does it take to receive an SEC whistleblower award?
- What happens after I apply for an SEC whistleblower award?
- What are the largest SEC whistleblower awards?
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
- 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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