Contact us today to find out the strategies that we have successfully employed to secure multi-million dollar SEC whistleblower awards for our whistleblower clients.
There are six main reasons for the success of the Dodd-Frank Act’s SEC Whistleblower Program.
While the financial incentive to report to the SEC is critical, it should be noted that approximately 85% of the award recipients to date raised concerns internally to their supervisors, compliance personnel, or through internal reporting mechanisms before reporting violations to the SEC. When internal compliance systems fail or companies attempt to ignore/downplay/cover-up legitimate concerns, the monetary awards the program offers appropriately incentivize whistleblowers to continue their efforts to expose the wrongdoing by reporting directly to the SEC.
Third, most individuals, regardless of citizenship, are eligible to receive awards under the program. For example, compliance personnel, including internal auditors, external auditors, officers, and directors, are eligible for awards if certain exceptions apply. Individuals conducting independent analyses of fraud are eligible for awards. In certain circumstances, even culpable whistleblowers can be eligible for awards.
According to the SEC Whistleblower Program’s 2019 Annual Report, nearly 70% of the award recipients to-date are current or former insiders of the entity about which they reported information of wrongdoing to the SEC. The program acknowledges the importance of information from corporate insiders and gatekeepers (among others) and provides exceptions in its rules that permit them to be eligible for awards.
Fifth, the SEC has taken some enforcement actions to combat whistleblower retaliation. For example, in 2014, the SEC issued a cease-and-desist order against Paradigm Capital Management Inc., a hedge fund advisory firm, for engaging in prohibited transactions and then retaliating against a whistleblower who disclosed the unlawful trading activity to the SEC.
Due to ambiguity in the statute, however, the anti-retaliation provision of the Dodd-Frank Act limits protected whistleblowing primarily to disclosures of potential violations to the SEC. See Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767 (2018). Whistleblowers who make disclosures only to their employers, however, might have a remedy under Section 806 of the Sarbanes-Oxley Act (SOX), which protects both internal whistleblowing (e.g., reporting securities fraud to a supervisor) and whistleblowing to the SEC or under state whistleblower protection laws. Proposed legislation would clarify that the Dodd-Frank Act anti-retaliation provision protects both internal whistleblowing and whistleblowing to the SEC.
For more information about the Dodd-Frank Act’s SEC Whistleblower Program, you can reference Zuckerman Law’s e-book: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award. This e-book offers practical tips for whistleblowers and insights that the firm has gained through representing whistleblowers before the SEC.
If you have information that may qualify for an SEC whistleblower award, contact the Director of our SEC whistleblower practice at mstock@zuckermanlaw.com or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential. 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.
For more information about the Dodd-Frank Act’s SEC Whistleblower Program, see 5 Tips for SEC Whistleblowers and Lessons Learned from SEC Whistleblower Awards. And see our MarketWatch column: More than 33,000 tips, $2.5 billion in financial remedies and $500 million in awards to investors — the SEC’s whistleblower program turns 10 years old today.
In conjunction with our courageous clients, our SEC whistleblower attorneys have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies, and return funds to defrauded investors.
In contrast to many other SEC whistleblower law firms, our multi-disciplinary team of SEC whistleblower lawyers includes a Certified Public Accountant and Certified Fraud Examiner with substantial experience auditing public companies and investigating complex fraud schemes. We understand the many challenges that the SEC faces in investigating our clients’ disclosures and take measures to increase the likelihood that the SEC will be able to effectively pursue the disclosures that our SEC whistleblower lawyers provide on behalf of our clients.Recently the Association of Certified Fraud Examiners published a profile of SEC whistleblower attorney Matthew Stock’s success working with whistleblowers to fight fraud:
Click here to hear SEC whistleblower attorney Matthew Stock’s tips for SEC whistleblowers.
Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.