Image of If I report my company's inflated key performance metrics, can I qualify for an SEC whistleblower reward?

If I report my company’s inflated key performance metrics, can I qualify for an SEC whistleblower reward?

SEC Whistleblower Rewards for Reporting Inflated Key Performance Metrics

Yes, under the SEC Whistleblower Program a disclosure to the SEC about a company’s falsely inflated key performance metrics can qualify for an SEC whistleblower reward in the amount of 10% to 30% of the monetary sanctions that the SEC collects in an enforcement action.  For example, Exchange Act Regulation S-K Item 101 requires, where material to understanding the issuer’s business, disclosure by a reporting segment of  “[t]he dollar amount of backlog orders believed to be firm, as of a recent date and as of a comparable date in the preceding fiscal year, together with an indication of the portion thereof not reasonably expected to be filled within the current fiscal year, and seasonal or other material aspects of the backlog.”

A misleading disclosure about a reporting segment’s backlog orders (i.e., future revenue) can violate Regulation S-K and also violate SEC rules that require issuers to maintain adequate internal controls over financial reporting.  If the SEC collects more than $1 million as a result of a whistleblower’s tip about such violations, the whistleblower is eligible to receive between 10% to 30% percent of the monetary sanctions collected as a whistleblower reward.

best whistleblower lawyers representing whistleblowers at the SECIf 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.

Our firm’s experienced 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.

Enforcement Action for Inflated Key Performance Metrics 

In 2018, the SEC took an enforcement action against KBR for inflating backlog orders in its public filings, which misled investors about the company’s anticipated revenue under the contracts.  In particular, the SEC found that KBR included “$459 million in its publicly disclosed backlog for one of seven contracts it entered into to complete pipe fabrication and modular assembly contracts in Canada, even though KBR had not received — and the counterparty was not obligated to provide — any orders under the contract.”    KBR’s annual report (Form 10-K) defined “backlog” as “the dollar amount of revenue we expect to receive in the future as a result of performing work on contracts awarded. . . All backlog is attributable to firm orders. . . Certain contracts provide maximum dollar limits, with actual authorization to perform work under the contract agreed upon on a periodic basis with the customer. In these arrangements, only the amounts authorized are included in backlog.”  Including more the amount of actual work authorizations as backlog was misleading to shareholders because it improperly inflated projected revenue.

In addition, the SEC found that KBR made inaccurate estimates of the costs to complete the contracts and that its internal accounting controls were not properly designed to prevent or detect these errors.  As noted in the SEC’s order, KBR ultimately issued a restatement that disclosed the additional projected costs to complete the projects resulting in charges of $156 million, consisting of the reversal of $24 million in previously recognized pre-tax profits, the recognition of approximately $97 million in pre-tax losses at completion, and a $35 million reduction in previously recognized revenue.  The $156 million charge represented 91% of KBR’s 2013 net income (as restated).  KBR agreed to pay a $2.5 million penalty to settle the SEC’s charges.

Tips to Successfully Navigate the SEC Whistleblower Program

SEC Whistleblower Lawyers Attorneys and Law FirmUnder the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information about violations of the U.S. federal securities laws that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million.  A whistleblower may receive between 10% to 30% percent of the monetary sanctions collected as a whistleblower reward.

To learn more about the SEC Whistleblower Program, download the eBook SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.

Process to Obtain SEC Whistleblower Award

Top-Rated SEC Whistleblower Lawyers

We have assembled a team of leading SEC whistleblower lawyers to provide top-notch representation to SEC whistleblowers.  Recently Washingtonian magazine named two of our attorneys top whistleblower lawyers.  U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 firm in Litigation – Labor and Employment in Washington DC.           

If you are seeking representation in an SEC whistleblower bounty case, click here, or call us at 202-262-8959 to schedule a free, confidential consultation.


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.