The SEC Whistleblower Program offers substantial financial rewards for reporting securities law violations. Since 2011, the SEC has awarded over $2 billion to whistleblowers who provided information leading to successful enforcement actions. If you know about securities fraud, you may be entitled to a significant award.
How the Program Works
The Dodd-Frank Act created the SEC whistleblower program to incentivize reporting of securities violations. Whistleblowers who provide original information leading to SEC enforcement actions resulting in over $1 million in sanctions are eligible for awards. Awards range from 10% to 30% of the sanctions collected.
"Original information" means information derived from your independent knowledge or analysis that isn't already known to the SEC. Information from public sources, news reports, or legal proceedings generally doesn't qualify.
Qualifying Violations
Reportable violations include accounting fraud and financial statement manipulation, insider trading, market manipulation, Ponzi schemes and investment fraud, foreign bribery (FCPA violations), offering fraud, unregistered securities offerings, and investment adviser or broker-dealer misconduct.
The violation must fall under securities laws enforced by the SEC. Employment disputes, general corporate misconduct, or violations of other laws don't qualify unless they also involve securities law violations.
Award Amounts
If the SEC imposes sanctions exceeding $1 million based on your information, you're entitled to between 10% and 30% of the amount collected. The largest individual award to date exceeded $279 million. Multiple awards have exceeded $100 million.
The SEC considers several factors in determining the percentage: significance of the information, assistance provided during the investigation, the SEC's interest in deterring violations, and whether you participated in internal compliance procedures before reporting externally.
How to Submit a Tip
Submit tips using SEC Form TCR (Tip, Complaint, or Referral) through the SEC's online portal. You can submit anonymously if represented by an attorney—many whistleblowers choose this option to protect their identities during the investigation.
Your submission should be as detailed as possible, including what the violation is, who is involved, when and how it occurred, what documents or evidence exist, and how you came to know about it. Concrete, documented information is more likely to lead to action than general allegations.
Related Actions and Awards
Whistleblowers may also receive awards based on related actions—enforcement actions by other agencies (like the DOJ or state regulators) that arise from the same information. This can significantly increase total awards when multiple agencies pursue violations.
Employment Protections
The Dodd-Frank Act protects whistleblowers from retaliation. Employers cannot discharge, demote, suspend, threaten, harass, or discriminate against employees for reporting to the SEC. Retaliation victims can sue for reinstatement, back pay, and attorney's fees.
Protections apply even if the SEC doesn't pursue your tip or find a violation. The act of reporting in good faith triggers protection.
Confidentiality
The SEC is prohibited from disclosing your identity without your consent, subject to limited exceptions for court proceedings or investigations. Anonymous submissions through an attorney add another layer of protection—your identity isn't revealed unless an award is paid.
Who Cannot Receive Awards
Certain individuals are ineligible for awards: foreign government officials, SEC or DOJ employees, compliance or audit personnel who learned information through their job (with some exceptions), and those who participated in the fraud. Culpable participants may still receive reduced awards in some circumstances.
Internal Reporting Considerations
You're not required to report internally before going to the SEC, but doing so may increase your award percentage. Internal reporting isn't always advisable—it can lead to retaliation, evidence destruction, or pre-emptive legal action by the company.
Consider whether your company has a genuine compliance culture or is likely to suppress information. Consulting an attorney before internal reporting helps protect your interests.
Getting Legal Help
Experienced SEC whistleblower attorneys can maximize your award and protect your identity. They understand what information the SEC values, how to present tips effectively, and how to navigate the process while maintaining confidentiality. Most work on contingency, taking a percentage only if you receive an award.