In July, 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act became a law, the whistleblower incentive program was created as well. The whistleblower program pays people a bounty in return for information that leads to the U.S. Securities and Exchange Commission (SEC) uncovering violations that lead to monetary sanctions exceeding $1 million.
The SEC whistleblower program depends on individuals who are willing to report possible violations, nevertheless, not every tip submitted to the SEC warrants further investigation. An SEC whistleblower attorney, who has access to resources such as forensic accountants and financial analysts, is capable of determining if the information is actionable. Having an attorney submit the tip has two main advantages; it is an anonymous submission and if the law firm is experienced in securities litigation, they will ensure the submission contains enough information for the SEC to begin an investigation.
If a tip significantly contributes to a case where sanctions are imposed for SEC violations, the whistleblower may receive 10 to 30 percent of the sanctions as a reward. This is where having an SEC whistleblower lawyer is important; the lawyer is an advocate for their client. The SEC uses seven factors for determining the whistleblower’s reward, including the helpfulness of the tip and the whistleblower’s cooperation during the investigation. An SEC whistleblower attorney’s job is to liaison with the SEC and see that his or her client gets largest reward that they are entitled to.
Whistleblower attorneys also help individuals who are subject to unlawful retaliation by their employer for submitting information to the SEC. Employers cannot fire or demote employees who give the SEC information about possible securities violations. While the vast majority of whistleblowers are employees of the corporation committing the possible fraud, anyone may submit a tip to the SEC if they have credible information. Typically, only employees have access to proof of a fraud scheme since tips cannot consist of publicly available information.
Hesitant whistleblowers should consult an attorney familiar with the whistleblower program for a free case evaluation. It’s not necessary to disclose any information, including the name of the possible securities law violator.