Image of SEC Whistleblower Program: How might information about securities law violations "lead to" a successful SEC enforcement action?

SEC Whistleblower Program: How might information about securities law violations “lead to” a successful SEC enforcement action?

Information “leads to” a successful SEC action if it causes the SEC to:

  • Open an investigation (even if the information ultimately does not have a strong nexus to the SEC’s charges in the action);
  • Re-open a previously closed investigation;
  • Pursue a new line of inquiry; or
  • If the information significantly contributes to an open investigation.

Whistleblowers have enabled the SEC to protect investors and halt ongoing fraud. The largest SEC whistleblower awards to date are $114 million and $50 million.

An individual may be eligible to receive an award where their information leads to a successful enforcement action—meaning generally that the original information either caused the staff to open an examination or investigation, or the original information significantly contributed to a successful enforcement action where the matter was already under examination or investigation.

Of the whistleblowers who received awards in FY 2021, approximately 56% provided original information that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination. In assessing whether information assisted with an ongoing matter, the  SEC considers factors such as whether the information allowed the SEC to bring an action in significantly less time or with significantly fewer resources, and whether it supported additional successful charges, or successful claims against additional individuals or entities.

A whistleblower whose only source of original information is an existing investigation or proceeding is unlikely to qualify for an award. Information that is exclusively derived from a governmental investigation is expressly excluded from the definition of “original information” under Section 21F(a)(3) of the Exchange Act.

For more information about whistleblower rewards and bounties, contact the SEC whistleblower lawyers at Zuckerman Law at 202-262-8959. And click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:

SEC whistleblower lawyers

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

 

Tips for Qualifying for an SEC Whistleblower Award

 

SEC Whistleblower Bounties

 

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Information leads to a successful SEC action if it causes the SEC to open an investigation, or if it causes the SEC to reopen a previously closed investigation. It can also lead to a successful enforcement action if it causes the SEC to pursue a new line of inquiry, or if it significantly contributes to an already open investigation.

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.