Former SEC Prosecutor
and Wall Street Defense Counsel
Since its inception, the Securities and Exchange Commission (SEC) whistleblower program has had a breathtaking impact. Whistleblower tips have resulted in more than $6.3 billion in monetary sanctions against firms, while meritorious whistleblowers have received more than $1.3 billion in awards. But people in the securities field don’t always know what constitutes a worthwhile SEC tip and what kinds of cases interest the agency. The SEC’s recently-released analysis of FY2022 whistleblower submissions sheds light on these questions and more.Who You Are Is Less Important Than What You Know
The SEC wants people with knowledge of malfeasance to come forward. Those who do play a critical role in protecting investors and the entire marketplace. In turn, the SEC protects the whistleblowers, no matter who they are. According to the head of the SEC whistleblower program, “Regardless of whether a whistleblower is a corporate insider, a main street investor, or an unrepresented claimant, the Commission vigorously safeguards their identity while rewarding eligible individuals who identify bad actors in our markets.”
As the SEC’s 2022 report shows, the tip itself, not the person’s affiliation, determines the SEC’s response.
For example, while SEC rules generally prohibit compliance officials from receiving whistleblower awards, the agency recently made an exception for one officer. In that case, after the compliance officer reported concerns to their company and waited 120 days for executives to act. At the end of that period, with no action taken by company leadership, the officer alerted the SEC.
And of all the tips received this year, one of the most noteworthy came from an outsider unaffiliated with the respondent entity. The outsider’s analysis of publicly available information wowed SEC staff, who commended the “unusual effort and intensive research” that made the tip so valuable.Content is King
The SEC’s response to the outsider’s tip and others like it make one thing clear: substantive tips are more useful than a simple heads-up about a bad transaction.
No doubt this is at least in part due to the sheer volume of tips the SEC receives (there were 12,300 in FY2022). Whistleblowers who come to the SEC with a well-developed claim are more likely to stand out in the crowd. They provide analysis of deals, decipher opaque reports, and more, and present their information in a form that SEC investigators can readily understand and act upon.Types of Submissions
Unfortunately, the SEC does not identify the tips that are the most likely to lead to investigations or an award by category. However, the agency does list the types of tips it receives, which potential whistleblowers can consult if they’re not sure whether their tip is worthy of consideration.
Frequently-submitted whistleblowing reports, according to the SEC, relate to:
The SEC receives tips on the following less frequently:
The SEC’s report also underscores that the agency acts when a company attempts to dissuade whistleblowing. This includes retaliatory action against whistleblowers and proactive efforts to prevent whistleblowers from coming forward. To drive home this point, the report highlights a few recent cases in which the SEC prosecuted companies that attempted to restrict or punish whistleblowers.
For example, the SEC took action against a firm whose employment agreements prohibited reporting. The agency also took a company to court after it required damaged investors to sign confidential settlement agreements in order to receive compensation for their losses.Take Action
Whistleblowing is an important service, and the rewards can be substantial, but filing a successful tip can be a complex process. That’s why Silver Law Group and the Law Firm of David Chase have created a strategic alliance to represent SEC whistleblowers.
With years of experience representing SEC whistleblowers, and an SEC enforcement lawyer on our team, we have an in-depth understanding of how the SEC Whistleblower Program operates. We understand what the SEC is looking for. We know how to make your tip stand out from the rest and how to show that it will lead to a successful action. We are here to help whistleblowers maximize their opportunity to receive a financial bounty. For a free, confidential consultation, contact us by email or call us today at (800) 975-4345.