Image of SEC Whistleblower Program: Do I have to report a securities law violation to my company before reporting the violation to the SEC?

SEC Whistleblower Program: Do I have to report a securities law violation to my company before reporting the violation to the SEC?

 

In determining whether to report internally prior to reporting to the SEC, a whistleblower should consult with counsel to determine the optimal path forward that will maximize a whistleblower award while also guarding against retaliation.

To qualify for an award, most whistleblowers are not required to report internally before reporting to the SEC. (See eligibility requirements for details.) However, the SEC provides incentives for internal reporting. For example:

  • If a whistleblower reports internally, and then to the SEC within 120 days of the internal disclosure, then the SEC will use the date of the internal report in determining whether the whistleblower provided “original information.” This internal reporting essentially “holds your place in line.”
  • If a whistleblower’s internal disclosure prompts a company investigation, the whistleblower will benefit from all the information discovered in that investigation.
  • The SEC may increase the size of a whistleblower’s award if the whistleblower participated in the company’s internal compliance systems.

Note that the whistleblower protection provision of the Dodd-Frank Act protects only whistleblowers that have provided information to the SEC about potential securities law violations.  Therefore, a disclosure that is made solely to a corporate compliance program (without also providing the information to the SEC) would not be protected under the Dodd-Frank Act.  But the anti-retaliation provision of the Sarbanes-Oxley Act may protect a disclosure to a person with supervisory authority over the employee if the whistleblower is covered under SOX.  See our tips to maximize your recovery in a whistleblower retaliation case.

During FY 2021, approximately 60% of the award recipients in FY 2021 were current or former insiders of the entity about which they reported information of wrongdoing. Of those recipients, more than 75% raised their concerns internally to their supervisors, compliance personnel, or through internal reporting mechanisms, or understood that their supervisor or relevant compliance personnel knew of the violations, before reporting their information of wrongdoing to the SEC.

Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act. Click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:

SEC whistleblower lawyers

For more information about whistleblower rewards and bounties, 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:

SEC Whistleblower Program Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award

Are SEC Whistleblowers Protected Against Retaliation?

Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.

Protections for SEC Whistleblowers Post-Digital Realty (11-6-2020)

Does the Sarbanes-Oxley Act Protect Employees Who Report Securities Law Violations Internally?

Yes.  To learn more about SOX whistleblower protection, see our guide titled Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers:

SOX Whistleblower Lawyers

The leading Sarbanes-Oxley whistleblower lawyers at Zuckerman Law have extensive experience representing corporate whistleblowers. U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 firm in Litigation – Labor and Employment in the Washington DC metropolitan area in the 2022 edition of “Best Law Firms.” Call us today for a free confidential consultation about your corporate whistleblower case.  We can be reached at 202-262-8959 or by clicking here.

The SOX whistleblower lawyers at Zuckerman Law have represented CEOs, CFOs, in-house counsel, partners at audit firms and other senior professionals in high-stakes whistleblower matters.

Best SEC Whistleblower Lawyers & Attorneys           

Click here to read reviews and testimonials from former clients.

Can a SOX Whistleblower Quality for an SEC Whistleblower Award?

SEC Whistleblower Bounties

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To remain eligible for an award, most whistle-blowers do not have to report internally prior to going to the SEC. With that said, the SEC has provided certain incentives to doing this. The first and perhaps most important incentive is that by participating with your company’s internal compliance system, this supports an increase in any award percentage that you may receive. In addition, if you report internally and then to the SEC within 120 days, the SEC will consider that your report date to be the same date as your internal report date when it determines whether or not you submitted original 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.