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SEC Whistleblower Program: Who is an “eligible” whistleblower for an award under the program?

Most individuals, regardless of citizenship, may be “eligible” whistleblowers if they voluntarily provide the SEC with original information about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur. The information provided must lead to a successful SEC action that results in monetary sanctions exceeding $1 million. One or more people can act as a whistleblower, but companies or organizations cannot qualify as whistleblowers. Furthermore, individuals are not required to be employees of a company to submit information about that company.

Different eligibility rules apply to:

  • officers, directors, trustees, or partners of an entity, if another person informed them of allegations of misconduct, or if they learned the information in connection with the entity’s processes for identifying, reporting, and addressing possible violations of law;
  • employees whose principal duties involve compliance or internal-audit responsibilities, or those employed by, or otherwise associated with, a firm retained to perform compliance or internal-audit functions for an entity;
  • those employed by, or otherwise associated with, a firm retained to conduct an inquiry or investigation into possible violations of law; and
  • employees of, and other persons associated with, a public accounting firm, if they obtained the information through the performance of an engagement required of an independent public accountant under the federal securities laws, and that information related to a violation by the engagement client or the client’s directors, officers, or other employees.

Any of those individuals may be eligible for an SEC whistleblower award if:

  • his or her disclosure is necessary to prevent conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors;
  • the entity is engaging in conduct that will impede an investigation of the misconduct; or
  • at least 120 days have elapsed since either:
    • the whistleblower provided the information to the entity’s audit committee, chief legal officer, or chief compliance officer (or their equivalents), or to his or her supervisor; or
    • the whistleblower received the information, if he or she received it under circumstances indicating that the entity’s audit committee, chief legal officer, or chief compliance officer (or their equivalents), or the whistleblower’s supervisor was already aware of the information

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:

SEC Whistleblower Program Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award

 

Lawyers Representing SEC Whistleblowers

Qualifying for a SEC Whistleblower Award

SEC Whistleblower Awards

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Generally anyone regardless of citizenship may be an eligible whistleblower under the SEC whistleblower program if they have original information about violations of federal securities laws. With that said there are some exclusions. Certain employees such as officers or directors or accountants, perhaps compliance personnel, different rules apply to them and an exception must apply for them to be eligible for an award.

Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.

Matthew Stock is the Director of the Whistleblower Rewards Practice at Zuckerman Law. He represents whistleblowers around the world in SEC, CFTC and IRS whistleblower claims. He is also a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.