Understanding the SEC Whistleblower’s Program
Authored by: Kevin n. Colquitt, Esq.
Easily put, whistleblowers act as the eyes and ears of the public — protecting others from corruption. They shed light on corruption and wrongdoing by publicly exposing dishonesty, such as bribery and fraud. In 2010, the U.S. Securities & Exchange Commission (SEC) implemented a program to reward whistleblowers for this valuable service. To date, the program has helped the SEC recover nearly a billion dollars from entities that have violated U.S. securities laws, and the SEC has paid out approximately $160 million to the whistleblowers who brought the information leading to these recoveries.
Under the program, a whistleblower doesn’t have to be an employee of the company that’s being accused of corruption allegations; they can simply be annoying willing to voluntarily share original information with the SEC that they believe is in possible violation of the federal security laws.
So, what type of information or misconduct is the SEC interested in? According to the SEC, below are commonly alleged corruption acts submitted to be reviewed or investigated under the SEC Whistleblower Program.
1. Insider trading
2. Theft or misappropriations of securities or funds
3. Bribery of, or improper payments made to foreign officials
4. Pyramid or Ponzi scheme
5. Manipulation of a security’s price or volume
6. Abusive naked short selling
7. Fraudulent conduct associated with municipal securities transactions or public pension plans
8. Other fraudulent conduct involving securities
It’s critical to consult with and retain an attorney with experience in SEC fraud cases. The attorney can help investigate, develop, and submit meritorious claims to the SEC on the whistleblower’s behalf. This is important for several reasons, one being the fact that the SEC has been inundated with thousands of whistleblower claims since 2011. A high-caliber submission filed by an experienced SEC whistleblower attorney is more likely to get noticed sooner. Also, a law firm with extensive experience in litigating securities fraud cases can help determine the strength of the whistleblower’s allegations to build a strong case to present to the SEC.
