Former SEC Prosecutor
and Wall Street Defense Counsel
Congress created the SEC Whistleblower Program to provide financial incentives for people to come forward when they suspect violations of federal securities laws. The Whistleblower Program offers substantial rewards when the SEC or certain other authorities bring an action that results in a damages award of more than $1 million. However, it is not easy to navigate this program. If you suspect a securities violation, or if you have suffered losses due to a securities violation, the experienced securities whistleblower attorneys at the Silver Law Group are ready to protect and advance your interests.
One of our attorneys, Scott Silver, previously worked as a defense attorney on Wall Street, and he now uses insights gained from that experience to fight for the rights of whistleblowers and investors. Another of our attorneys, David Chase, has gained substantial insights from previously working as Senior Counsel in the SEC's Enforcement Division, prosecuting violations of securities laws.
Our government recognizes that ordinary citizens and corporate insiders can make huge contributions to prosecuting securities and investment fraud. Securities are defined not only as stocks and bonds but also as other kinds of investments. The SEC relies on information and assistance from whistleblowers who become aware of possible violations of federal securities laws. These whistleblowers may assist the SEC in identifying legal violations and fraud earlier than the agency could discover them on its own.Dodd-Frank Wall Street Reform Act
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission established the Dodd-Frank Wall Street Reform Act in 2011. Dodd-Frank is considered more expansive and protective than Sarbanes-Oxley. It allows the SEC and other authorities to award a bounty to a whistleblower when the whistleblower voluntarily gives the SEC original information that results in a successful enforcement action in which monetary sanctions of over $1 million are awarded. Under section 922, the SEC is authorized to provide you with a percentage of the recovery only if you give original information, and the provision of information results in a successful SEC enforcement action or substantially helps with an existing SEC enforcement action.Who is a Whistleblower?
Anybody who provides new material information about a federal securities violation may have protection as a whistleblower under Dodd-Frank. As a whistleblower, you can be a current employee of the company that you report, a victim of an investment scheme, or even an outside analyst. In order to be eligible for the incentives, you will need to provide information voluntarily. You cannot obtain an award in situations in which the SEC asked you for the information. Also, you cannot receive an award if the SEC already knows of the violation. However, you need not submit the information yourself. It is possible and often advisable to submit the information through a securities whistleblower attorney.Blowing the Whistle on Securities Violations
Various securities violations can give rise to whistleblowing. Violations can include insider trading, misrepresentations in securities sales, brokerage firm malfeasance, fraud in buying or selling investments, and market manipulation. If you report a violation, the information that you provide needs to establish that a federal securities law was violated. State securities violations are not part of the program. You do not need to have firsthand information, but it is advisable to retain a knowledgeable securities whistleblower lawyer to make sure that you conduct investigation and research before a claim is presented to the SEC. The strongest, attention-getting claims include information obtained internally.Monetary Incentives
In order for you to obtain an award, the enforcement action that results from the information that you gave must lead to more than $1 million in sanctions. Your award will be between 10% and 30% of the sanctions. However, the amount can be increased, depending on how significant your information was, the extent of the success of the enforcement action against those violating the laws, and the SEC's interest in deterring similar misconduct, among other factors. Conversely, the award can be reduced if you were involved in the misconduct, if you unreasonably delayed in reporting information, or if you interfered with the internal procedures put in place by the company.Retaliation for Whistleblowing
Dodd-Frank includes anti-retaliation provisions. The law prohibits employers from discharging or discriminating against whistleblowers under the Dodd-Frank Act. If you are subjected to retaliation for being a whistleblower, you can sue under Dodd-Frank, which provides a private cause of action. You need not follow OSHA administrative procedures, as you would under Sarbanes-Oxley. Another feature of Dodd-Frank that distinguishes it from Sarbanes-Oxley is that it invalidates pre-dispute arbitration agreements regarding whistleblower retaliation claims.
The retaliation claim needs to be brought within six years of the retaliatory conduct or within three years of knowing about facts that are material to the claim. Remedies that you can recover if you succeed in establishing retaliation include reinstatement, double back pay, and fees and costs.
In the past, there was confusion over whether internal reports should count for the purposes of the anti-retaliation provision of Dodd-Frank. There was a circuit court split. In the Second Circuit, the anti-retaliation provision protected not only people who reported to the SEC but also people who reported potential securities violations to their own employer. However, an earlier Fifth Circuit decision held that an employee was not protected under the anti-retaliation provision of Dodd-Frank because he did not give the information directly to the SEC.
In 2018, the U.S. Supreme Court resolved the split. It determined that Dodd-Frank's unambiguous definition of a whistleblower excludes people who do not report a violation of a securities law to the SEC, even if they reported internally. However, Dodd-Frank does protect employees who report both to the SEC and internally, whether or not the employer is unaware of the external report. Sarbanes-Oxley does protect internal reporting, but it has different requirements than Dodd-Frank, including a 180-day filing deadline for administrative complaints.Consult a Securities Whistleblower Attorney to Understand Your Options
At the Silver Law Group, our attorneys provide skillful legal representation to securities whistleblowers in New York, elsewhere in the United States, and in Latin America and the Caribbean. Our comprehensive knowledge of this complex legal area allows us to easily navigate the nuances of legal matters for whistleblowers and investors. Call us at (800) 975-4345 or use our online form to set up a free consultation.