How to “Perfect” an SEC Whistleblower Tip to Qualify for an SEC Whistleblower Award
The rules of the SEC Whistleblower Program require whistleblowers to follow certain procedures when submitting a tip to the SEC. 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 lead to a successful enforcement action. The SEC recently amended the rules of the program to permit whistleblowers who originally failed to comply with certain procedures to fix, or “perfect,” their SEC whistleblower tips and become eligible for awards. As detailed below, the new rules require whistleblowers to act quickly to perfect their tips – so do not delay.
SEC Whistleblower Program
Under the SEC Whistleblower Program, whistleblowers are eligible for an award when they provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards range from between 10% and 30% of the money collected when the sanctions exceed $1 million. The SEC Whistleblower Program allows a whistleblower to submit a tip anonymously to the SEC if represented by an attorney.
Since the inception of the SEC Whistleblower Program, the SEC has received more than 52,400 whistleblower tips and awarded approximately $1.1 billion to 226 individuals.
During FY 2021, the SEC awarded approximately $564 million to 108 individuals —both the largest dollar amount and the largest number of individuals awarded in a single fiscal year. The two largest SEC whistleblower awards in the program’s history were paid in FY 2021 — a $114 million award to one whistleblower in October 2020 and a $110 million award to another in September 2021.
Required Procedures When Submitting an SEC Whistleblower Tip
The SEC Whistleblower Program’s rules require whistleblowers or their attorneys to file tips through the SEC’s online portal or by submitting a Form-TCR by mail or fax. See Rule 21F-9(a). In addition, a whistleblower must declare under penalty of perjury at the time they submit their information to the SEC that their information is true and correct to the best of their knowledge and belief. See Rule 21F-9(b). The SEC has treated the failure to file a properly executed TCR as grounds for denial of a claim for award.
Amended Rules Allow Whistleblowers to “Perfect” SEC Whistleblower Tips
On September 23, 2020, the SEC adopted amendments to the rules governing the SEC Whistleblower Program. Under the amended rules, a whistleblower who originally failed to comply with Rules 21F-9(a) and (b) can perfect their SEC whistleblower tip by submitting a properly executed TCR:
- Within 30 days of first providing information to the SEC; or
- Within 30 days of first learning of the requirements, e.g., if a whistleblower first learns of the requirements after retaining an attorney in connection with their submission. See Rule 21F-9(e).
On February 25, 2021, the SEC issued awards totaling more than $1.7 million to two whistleblowers who originally failed to comply with the rules, but then perfected their SEC whistleblower tips within 30 days of learning about the procedural requirements.
According to the press release announcing the awards: “As these awards show, deserving whistleblowers may receive an award if they comply with the Form TCR filing requirements within 30 days of first obtaining actual or constructive notice of the filing requirement or 30 days from the date the whistleblower hires a lawyer to represent them in connection with the whistleblower’s previous submission of information to the Commission, whichever occurs first, and they otherwise meet the eligibility requirements.”
Takeaway for SEC Whistleblowers
It is not uncommon for a whistleblower to provide original information to the SEC and assist in an investigation, only to realize years later that they did not file a properly executed TCR.
Whistleblowers should ensure that they complied with Rules 21F-9(a) and (b) in order to be eligible for an award. Whistleblowers should consult with an experienced SEC whistleblower attorney if they are uncertain about whether they followed the procedures correctly. Fixing any missteps could be the difference between a multimillion-dollar award, or no award at all.
Leading SEC Whistleblower Law FirmIf you have original information that you would like to report to the SEC Whistleblower Office, 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.
The law firm’s SEC whistleblower attorneys will work to quickly provide SEC whistleblowers with the highest-quality representation. 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.In contrast to other SEC whistleblower law firms, our team 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 we provide on behalf of our clients. Recently, U.S. News and Best Lawyers® named Zuckerman Law a Tier-1 firm in the Washington DC metropolitan area.
See the Associated of Certified Fraud Examiners’ recent profile of Matt Stock.
SEC Whistleblower Lawyers
How to Qualify for an SEC Whistleblower Bounty
- 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.
- See our post in The Compliance and Ethics Blog: Shkreli Trial Reveals the Challenges Faced by Compliance Whistleblowers.
Are Whistleblowers Protected from Retaliation?
Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.