Our Attorneys Help Third-Party Professionals Submit SEC Whistleblower Tips

Anyone can become a SEC whistleblower if they have original information that’s voluntarily submitted to the SEC. If someone becomes aware of wrongdoing, the SEC has a process for passing along this information. Partnering with an SEC whistleblower attorney can make it easier to submit information, stay anonymous, and collect the largest award.

SEC whistleblowers are frequently insiders who observe securities law violations and other misconduct. They may even unknowingly participate in the activity and later recognize the misconduct or become involved in an investigation.

But some whistleblowers are not insiders, but are in a position to become aware of securities laws violations. These individuals can be defrauded investors, journalists, bloggers, and third-party professionals who recognize that something is wrong and can demonstrate to the SEC that wrongdoing is or was happening at a firm or company.

A SEC whistleblower who is a third-party professional is someone who in the course of their work becomes aware of securities laws violations committed by others. Examples of third-party professionals who could discover misconduct are:

• CPAs frequently uncover wrongdoing such as financial statement fraud, accounting irregularities, insider trading, or misrepresentations during audits or financial reviews.
• Why a CPA should use an Attorney: They may face risks to their professional reputation, face retaliation, or have confidentiality concerns. Attorneys can help CPAs ensure proper legal protection, structure submissions for SEC eligibility, and enable anonymous tip filing.

• Auditors can detect discrepancies, fraud, or violations of securities laws during annual audits or forensic examinations while engaged in their work.
• Why auditors should use an Attorney: Like CPAs, auditors need to ensure compliance with professional ethical rules and avoid employer retaliation or career risk. Attorneys facilitate anonymous submission and navigate complex documentation and evidentiary requirements.

• Business consultants and compliance experts may identify violations while advising companies on regulatory adherence, best practices, or during compliance reviews.
• Why consultants should use an Attorney: Consultants are often external parties who want protection from retaliation or damage to business relationships. Attorneys act as intermediaries, handling sensitive information and ensuring all documents and claims meet SEC protocols while protecting the individual’s identity and rights.

Financial professionals are not the only ones who may find information to submit to the SEC as a whistleblower:

• Forensic accountants can uncover unusual or suspicious financial patterns.
• IT specialists can find evidence of cyber-related securities violations or data fraud.
• Financial analysts may observe illegal market manipulation or unauthorized disclosures.
• Why they should use an Attorney: These professionals may lack direct experience with SEC procedures and whistleblower protections, making it vital to work with an expert attorney to safeguard their rights, preserve their anonymity, and maximize eligibility for awards.

To protect themselves and comply with legal and regulatory requirements, third-party professionals partner with SEC whistleblower attorneys to submit tips confidentially, maximize protections, and potentially qualify for rewards.

The attorney acts as the point of contact and shields the whistleblower’s identity, especially in high-risk or sensitive cases, and protects the rights of the whistleblower.

It was a third-party professional who uncovered the biggest Ponzi scheme in history. Harry Markopolos is a former licensed broker and quantitative analyst who became an investigator during his tenure on Wall Street.

As he describes in his book, No One Would Listen, Madoff was the platinum standard by which every other investment and investment professional was judged. Working as a portfolio manager in 1999, his managers asked him to reverse engineer Madoff’s strategy so that they could offer a similar product to sell to their clients. Despite his diligence, Markopolous could not duplicate this strategy or explain how it worked. Madoff’s system really was too good to be true.

In his multiple submissions to the SEC, Markopolos listed more than 30 red flags that proved Madoff was running a Ponzi scheme, including:

• Madoff's claim to use a "split-strike conversion" options strategy that showed consistent returns despite market volatility.
• For Madoff to produce the returns he reported, he would have to buy considerably more options than the total volume that was available in the entire exchange at that time. Had Madoff done this amount of trading, the “ripple effect” would have been visible in underlying stock prices and market options. That “ripple” never materialized. Markopolous realized that there was no evidence that Madoff executed that volume of trading.
• Madoff’s returns did not correlate with the S&P 100, indicating that the alleged "trades" were not related to market activity.
• Using 14 years of analysis, Madoff's trades only had four "losing" months, unlike credible investments, which experience fluctuations over time.

Markopolos also found that Madoff’s trade tickets did not match the Option Price Reporting Authority (OPRA) tapes. These tapes contain a permanent record of every trade, and would have recorded anything Madoff traded. Madoff’s company trade tickets didn’t match the OPRA tapes because there were no trades, and the company printed them for their clientele. Anyone who decided to check these trade tickets would come to the same conclusion.