In most cases, whistleblowers should report fraud or misconduct to the SEC as soon as possible. While some situations require a whistleblower to wait 120 days before providing information to the SEC, most prudent whistleblowers will raise concerns immediately. There are a few reasons for this:
First, to be eligible for an award, a whistleblower must provide the SEC with “original information”—i.e., information not already known to the SEC. If someone reports another individual’s information to the SEC first, the latter will not be entitled to a percentage of any monetary sanctions collected.
Next, even if a whistleblower is the first to report the information, the SEC considers the timeliness of information to be a significant factor when determining the size of an award. Many whistleblowers wait too long to report to the SEC and so receive substantially reduced awards. In 2015, 20% of all awards were reduced because of an unreasonable reporting delay.
Finally, as a practical matter, the SEC is more likely to act on timely information. The SEC receives a significant number of tips and has limited resources. The best claims reveal fraud that the SEC can halt and whose impact the SEC can potentially minimize. The SEC will probably not act on tips about speculative fraud that occurred years ago.
That said, anyone who may have original information about a securities-law violation should hire a law firm that can quickly: (1) assess the claim; (2) draft a compelling tip, complaint, or referral (“TCR”); and (3) file with the SEC. In our experience, Zuckerman Law has been able to file whistleblowers’ TCRs months before other law firms can even assess potential claims.
If you are aware of securities fraud and need immediate representation, 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:
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It’s a tough decision to become a whistle blower. However, the SEC has provided many reasons that individuals should go to the SEC as quickly as possible. First, individuals must provide original information in order to be eligible for an award. If someone provides the information about the specific violation before you, you will no longer be eligible for an award. In addition, a lot of awards are reduced because of undue delay. In 2015, 20% of awards were reduced because whistle blowers waited too long before going to the SEC with the information. Finally and as a practical matter, the SEC is most likely to act on timely information.