SEC Whistleblower Awards

In order to be eligible for SEC whistleblower awards, the SEC must collect at least a million dollars with respect to any actions, called covered actions. Although this sounds like a high threshold, serious cases of securities fraud can involve much more. After the SEC has entered judgment on a violation and has posted it on its website, there is a 90-day period to file for an award.

Whistleblower awards range from 10-30%, but the SEC has a great deal of discretion within this range. Because award amounts can be significant, a whistleblower should make every effort to follow proper procedure according to the SEC program. To this end, an experienced whistleblower attorney could help make sure all documentation is accurate and filed in a timely manner. Call today for a consultation.

Factors Influencing Award Amounts

The degree to which the whistleblower provides useful information to the SEC is likely to make it more generous with an award. The SEC is supposed to consider the significance of the information provided, the degree of assistance provided by the whistleblower or the attorney, and the interest in deterring violations of law, among other factors.

A whistleblower can be disqualified from obtaining an award if they are convicted of a criminal violation related to the action. The award can be reduced if the whistleblower took action to interfere with internal reporting and somehow interfered with the SEC learning of the activity, or if the whistleblower was in some way culpable for the violations. If the whistleblower also took an unreasonable delay in reporting to the SEC, the award could be reduced. These are all factors to discuss with a whistleblower attorney when filing with the SEC.

Whistleblower’s Culpability

A whistleblower’s culpability plays a role in the SEC’s award decision in that it can disqualify them and/or lower the amount of an award to a whistleblower. Generally, if a whistleblower was not planning or initiating the illegal action, the fact that they happen to be involved would not be a factor. If they were convicted of a crime related to the action or planned it, however, that would be a different matter.

Whether having culpability eliminates the chance of an award entirely depends on how culpable the whistleblower was. If the whistleblower voluntarily came forward and was acting as if under the orders of somebody else, they are not likely to be excluded from obtaining the award.

Whistleblower Award Timetable

How long it takes for the SEC whistleblower awards to be given to a whistleblower depends on how soon the SEC receives the money from the defendant after the process is completed. The award process begins with filing a tip to the SEC, waiting for the SEC to investigate, and then adjudicating it or taking action against the defendant. Even after the money is obtained from the defendant, the SEC must then post on its website that a covered action has collected enough to qualify a whistleblower to apply for an award. That entire process alone can take up to a year.

Almost anything with respect to litigating the claim can delay the process. That can include the defendant’s ability to put up a defense and collecting money from the defendants. Sometimes, the defendant’s funds can disappear suddenly offshore, making it more difficult to collect or for the SEC to know about. Also, the SEC gets thousands of tips, and the agency has to handle them manually. It is not the case that they can immediately review and handle every case overnight.

Appealing an Award

If a whistleblower is not satisfied with the proposed award, they have no recourse. The Security and Exchange Commission Whistleblower Program allows for an appeal of whether or not an award is made, but not the amount of it. The SEC has broad discretion as to the amount of an award to give as long as it is within the 10% to 30% range. There is no appeal, and it is not a reviewable issue.

How a Whistleblower Attorney Can Help

The whistleblower lawyer can make sure that proper procedures are followed to ensure that SEC whistleblower awards claims are made timely and correctly. A lawyer can understand the degree to which the condition will affect the time to act and the degree to which the law has been violated. It is an involved process to file an action under the SEC rules, and it can include action taken by the SEC against more than one defendant in some cases. A whistleblower lawyer’s job is to make the SEC Whistleblower Program understandable and make the process easier.

If you have information about securities fraud and want to blow the whistle, you could benefit from the assistance of an attorney. A lawyer with specific experience handling SEC whistleblower cases could guide you through every step of the process from first reporting to award. Contact a lawyer today to get started.