SEC Awards Whistleblowers for Credible Information

The U.S. Securities and Exchange Commission (SEC) provides monetary awards to those who can give information related to persons or entities that have violated federal securities laws. Common securities violations include misrepresenting important information about potential investments, manipulating the market prices of securities, theft of customers’ funds or securities, insider trading, and the sale of unregistered securities.

A decade ago, the SEC launched its whistleblower program. The whistleblower program allows individuals to submit tips and complaints to the SEC about corporate wrongdoing, such as investor misrepresentation and accounting fraud. Whistleblowers may be eligible for a monetary award when they voluntarily offer the SEC timely, original, and reliable information that results in a successful enforcement action. These awards can range anywhere from 10% to 30% of the money collected when the monetary sanctions surpass $1 million.

Since issuing its first award in 2012, the SEC has awarded about $1 billion to 207 individuals under the whistleblower program. By the end of the SEC’s 2021 fiscal year in September, the agency awarded approximately $564 million to 108 individuals. According to the SEC, this is the greatest sum of money to the most whistleblowers in a single year since the program launched. The money that is awarded to whistleblowers comes from the Investor Protection Fund created by Congress and is financed through the monetary sanctions that the SEC collects from violators of securities laws.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the SEC safeguards the confidentiality of whistleblowers. The SEC does not reveal any information that could expose a whistleblower's identity. The Dodd-Frank Act also broadened the protections for whistleblowers and expanded the prohibitions against retaliation. The SEC can take legal action against employers who retaliate against whistleblowers. Moreover, whistleblowers also have the right to file a retaliation complaint in federal court. Whistleblowers who were terminated in retaliation for reporting a possible securities law violation to the Commission can sue their employer in federal court and pursue double back-pay damages (including interest), reasonable attorneys’ fees, reinstatement, and reimbursement for expenses associated with the litigation.

Please contact The Law Firm of Morgan Rooks, P.C. today at (856) 746-6332 if you suspect securities violations or have been retaliated against by an employer for reporting securities violations.

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