Former SEC Prosecutor
and Wall Street Defense Counsel
The U.S. government recognizes that ordinary citizens and corporate insiders routinely assist in reporting securities and investment fraud. In 2011, the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) established new programs under the Dodd-Frank ACT which allows the federal securities regulators to award a bounty to a whistleblower and which protects any whistleblower from improper retaliation.
Simply speaking, yes. Any person who provides the SEC with new material information in accordance with the SEC’s procedural rules and reports current or past wrongdoing of the federal securities laws can be a whistleblower. Whistleblowers can include current employees of company’s engaged in wrongdoing, victims of investment schemes or outside analysts who can demonstrate the falsity of claims. The program is open to anyone with information about a possible violation – even if that person doesn’t have first-hand knowledge. For example, Harry Markopolous, the analyst who desperately tried to report the Madoff Scandal to the SEC would now potentially qualify as a whistleblower. However, a potential whistleblower should retain experienced counsel is to assist in conducting all available research and investigation to present a strong claim to the SEC. Nothing replaces delivering a claim to the SEC with all of the necessary evidence with a red bow around it to get regulators’ attention. A strong claim consists of a mix of public information and information someone obtained internally.
The SEC can bring claims against any corporation or individual who violates the federal securities laws. This includes any claims involving the trading of securities and violations by members of the securities industry including all of the major Wall Street firms. The definition of a security is very broad and includes many different types of investments, not just stocks and bonds. The SEC routinely investigates and prosecutes cases against individual and corporate violators for a broad range of violations including misrepresentations in the sales of securities, market manipulation, brokerage firm malfeasance and fraud in the purchase or sale of investments.
An SEC whistleblower is protected from retaliation by his employer pursuant to federal rules. The Dodd-Frank Wall Street Reform and Consumer Protection Act makes it unlawful for any employer to discharge, demote, suspend, threaten or harass, directly or indirectly, a whistleblower because of any lawful act by the whistleblower, including: providing information to the SEC; initiating, testifying in or assisting in an SEC investigation or related enforcement action; and making any disclosures required or protected by law. If a whistleblower, in good faith, reasonably believes that the information provided to the SEC relates to a possible violation of the federal securities laws, the whistleblower is protected from retaliation – regardless of whether the requirements, procedures and conditions to qualify for an award have been satisfied. If whistleblowers are retaliated against in violation of the law, they may be entitled to reinstatement, double back pay, attorney fees, and other litigation related expenses.
Under Dodd-Frank, eligible whistleblowers can receive an award of between 10-30% of any monetary sanctions the SEC collects on penalties that exceed $1 million dollars plus any related actions by other regulatory and law enforcement authorities. Due to the size of monetary sanctions in many SEC cases and related enforcement actions, whistleblowers may be eligible for substantial monetary awards. While the exact percentage received by a whistleblower is in the sole discretion of the SEC, the SEC will consider a variety of positive and negative factors. Accordingly, to maximize any potential monetary award, whistleblowers should work with experienced counsel to best maximize the potential recovery. We frequently work on a contingency fee basis and only get paid if you successfully recover an award.
Dodd-Frank allows whistleblowers to submit information about violations of the securities laws to the SEC anonymously. However, to do so, whistleblowers must be represented by an attorney who can verify the whistleblowers identity before the information is submitted to the SEC. After a successful SEC enforcement action and prior to receiving any monetary award, for eligibility and other reasons, whistleblowers must disclose their identity to the SEC.
We primarily work on a contingency fee basis. This means we only get paid if we have a successful recovery for you. We also advance all costs. Everything we do is to try and maximize the client’s recovery.
Our lawyers routinely represent victims of securities and investment fraud. We will pursue all potential avenues of recovery for you including any potential claims against the defendant and any other potential wrongdoers. We also have significant experience pursuing claims against the broker-dealers, investment banks and hedge funds simultaneous with the SEC action against an issuer or primary player.
If you have information about a violation of the federal securities laws or want to learn more about the SEC whistleblower program, you may contact us at 1-800-975-4345 or at firstname.lastname@example.org.
Scott Silver, the managing partner of Silver Law Group and David Chase are longtime friends and colleagues who have worked together as co-counsel on countless cases. Both law firms focus on securities and investment law. However, Scott Silver primarily represents investors and victims of stockbroker misconduct in FINRA arbitration claims. David Chase is a former SEC attorney who routinely represents clients before the SEC, FINRA and other regulators. After the creation of the SEC whistleblower program, they realized that their firms working together can provide whistleblowers with the best opportunity to successfully file a whistleblower claim and counsel regarding all protections offered by the SEC whistleblower program.
If you have information about violations related to commodities, futures, or similar products, including all violations of the Commodity Exchange Act, the CFTC has established a whistleblower program similar to the SEC.
If your information also implicates United States tax laws, you may want to learn more about the IRS Whistleblower Program.
The Department of Justice enforces the False Claims Act, another major whistleblower law which allows citizens to report companies which improperly seek tax payer money for services which were not provided. These claims frequently include claims against medical or pharmaceutical companies for billing the government for services which were improperly classified or weren’t provided.