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SEC Whistleblower Program: When is the best time to report fraud or misconduct to the SEC for an award?


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, we advise our clients to report promptly and that advice has helped our clients obtain awards. There are a few reasons to report promptly:

  • 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.  In 2015, 20% of all awards were reduced because of an unreasonable reporting delay.  Reporting promptly increases the chance of obtaining the 30%maximum award percentage.
  • 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.

If you have original information about a securities-law violation, consider retaining an experienced and effective SEC whistleblower law firm that can quickly: (1) assess the claim; (2) draft a compelling tip, complaint, or referral (“TCR”); and (3) persuade the SEC to investigate the violation. By acting promptly to prepare persuasive submissions to the SEC, we have obtained awards for several of our clients.

The SEC Whistleblower Program has issued more than $1.8 billion in awards to whistleblowers since 2012, which includes a multi-million dollar award to one of our clients.  

An unreasonable delay in reporting a violation may cause the SEC to reduce an award.  In making this determination, the SEC considers:

  • whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
  • whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct;
  • whether the violations identified by the whistleblower were continuing during the period of delay;
  • whether investors were being harmed during that time; and
  • whether the whistleblower might profit from the delay by ultimately obtaining a larger award because the failure to report permitted the misconduct to continue, resulting in larger monetary sanctions.

One or more of these circumstances, in the absence of significant mitigating factors, would likely cause the SEC to recommend a substantially lower award amount.

reporting promptly to the SECCommon reasons that weigh against determining that a delay was unreasonable include: the whistleblower engaging for a reasonable period of time in an internal reporting process, the delay being reasonably attributable to an illness or other personal or family circumstance, and the whistleblower spending a reasonable amount of time attempting to ascertain relevant facts or obtain an attorney in order to remain anonymous.

If you are seeking representation in an SEC whistleblower award or retaliation case, click here or call us at (202) 930-5901 to schedule a free, confidential consultation with our experienced and effective SEC whistleblower lawyers.

U.S. News and Best Lawyers®  named Zuckerman Law a Tier-1 Law Firm.

Recently the Association of Certified Fraud Examiners published a profile of SEC whistleblower lawyer Matt Stock’s success working with whistleblowers to fight fraud:

SEC whistleblower lawyers

Impact of Unreasonable Delay on Award Percentage

timing and sec whistleblowingIn FY 2021, the SEC found that whistleblowers in seven matters had unreasonably delayed in reporting their information to the Commission in FY 2021. The reporting delays ranged from about two years to more than five years.

Significantly, certain reporting delays can be mitigated by a whistleblower’s internal reporting or taking other efforts to remedy the violation, where the whistleblower is located abroad and may not have the benefit of the Dodd-Frank anti-retaliation protections, or where part of the delay occurred prior to July 21, 2010.  Whistleblowers are encouraged to report their information promptly to the Commission, particularly where there is ongoing investor harm.

The September 2020 SEC release (Release No. 34-89963) adopting amendments to the rules governing the SEC Whistleblower Program explains how the SEC assesses whether a whistleblower’s delay in reporting to the SEC is unreasonable:

After considering the comments on this proposed rule and as a result of further analysis of the operation of the whistleblower program, we have determined not to adopt a specific time-based presumption of unreasonable delay as interpretive guidance. We continue to believe that a 180-day time period may be consistent with unreasonable delay in many circumstances. But we are persuaded that the idiosyncratic nature of the various claims the Commission is often presented with counsels in favor of continuing to assess the facts and circumstances of each case. Among other relevant considerations in assessing whether a delay was in part or in whole unreasonable (and whether any reduction is warranted if the delay was unreasonable) include whether the delay was a result of circumstances beyond the whistleblower’s control and whether reasonable actions were taken by the whistleblower during the period of delay.

For example, we agree with the commenter who expressed the view that delay by a whistleblower who is genuinely following internal compliance procedures or otherwise genuinely attempting to address the misconduct internally may be reasonable. Specifically, if the whistleblower provides evidence for the administrative record that the whistleblower was continuing to pursue the matter internally and the company’s responses to the whistleblower indicated that the company was taking investigatory or remedial action in a diligent and timely fashion, delay of up to or more than a 180-day period may be deemed reasonable under the facts and circumstances. The Commission will also continue to consider, for example, whether a whistleblower’s delay was in whole or in part reasonably attributable to illness or other personal or family circumstances or to a reasonable amount of time spent attempting to ascertain relevant facts or obtain an attorney in order to remain anonymous.

The Commission will continue to evaluate whether the violations were continuing during the delay and whether investors were being harmed during that time. Another relevant consideration that the Commission may consider is whether the delay threatened the Commission’s ability to pursue the violations either because of the statute of limitations,141 or the loss or destruction of evidence during the period of delay. The Commission will also continue to consider whether the whistleblower might ultimately profit from the delay by obtaining a larger Award Amount because the failure to report permitted the misconduct to continue, which can affect the calculation of the monetary sanctions, including, for example, increased disgorgement of ill-gotten gains and penalties. The Commission will continue to set awards at amounts that appropriately reflect these considerations.

We continue to encourage whistleblowers to report as early as possible, to ensure the Commission is able to timely address misconduct and, whenever possible, return those funds to harmed investors.

Report Fraud to the SEC Promptly

A March 2023 order denying an award denying an award underscores the risk entailed in delaying a report in that a whistleblower disclosure would not be voluntary if the SEC directs a request, inquiry or demand to the whistleblower before the whistleblower makes a disclosure to the SEC:

Under Exchange Act Rule 21F-4(a), a submission to the Commission is considered “voluntary” if, as relevant here, it is provided “before a request, inquiry, or demand that relates to the subject matter of [the] submission” is directed to thevclaimant or the claimant’s representative “[b]y the Commission” or in “connection with an investigation by . . . any other authority of the federal government.”  Exchange Act Rule 21F-4(a)(1)(i), 17 C.F.R. § 240.21F-4(a)(1)(i).  If the Commission directs a request, inquiry, or demand to a claimant or his/her representative before the claimant makes a submission, “[the claimant’s] submission will not be considered voluntary, and [the claimant] will not be eligible for an award.” Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2). The purpose of the rule is to “creat[e] a strong incentive for whistleblowers to come forward early with information about possible violations of the securities laws rather than wait until Government or other official investigators ‘come knocking on the door.’”  Proposing Release for Whistleblower Rules, 75 Fed. Reg. 70488, 70,490 (Nov. 17, 2010); see also Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34,307 (June 13, 2011) (stating that a “whistleblower award should not be available to an individual who makes a submission after first being questioned about a matter (or otherwise requested to provide information) by the Commission staff acting pursuant to any of [its] investigative or regulatory authorities”).  Rule 21F-4(a)(1) establishes a “simple and straightforward test for when we will treat a whistleblower as having submitted information voluntarily; as relevant here, the whistleblower must provide his or her tip to the Commission before investigators direct a ‘request, inquiry, or demand’ to the whistleblower that relates to the subject matter of the tip.” Order Determining Whistleblower Award Claim, Exchange Act Release No. 84046 at 8 (Sept. 6, 2018). However, a claimant’s submission also will be considered voluntary if the claimant “voluntarily provided the same information to one of the other authorities identified above [in Rule 21F-4(a)(1)],” such as Congress, other authorities of the federal government, or a state attorney general or securities regulatory authority, “prior to receiving a request, inquiry, or demand from the Commission.”Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).

Tips from Experienced SEC Whistleblower Attorneys

Click below to hear 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

SEC Whistleblower Attorneys

How to Get an SEC Whistleblower Bounty

How our SEC Whistleblower Lawyers Help SEC Whistleblowers Successfully Navigate the SEC Whistleblower Process

SEC Whistleblower Bounties


It’s a tough decision to become a whistleblower. 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 whistleblowers 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.

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.