The federal securities laws created the SEC in the 1930s to protect investors, maintain fair and efficient markets, and to facilitate capital formation. In the wake of the Great Recession, Congress increased federal oversight on the financial industry by enacting the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act included a directive that led to the creation of the Securities and Exchange Commission (SEC) Whistleblower Program, which provides monetary incentives and protection from retaliation for individuals who report securities violations. The SEC pays whistleblower awards as high as 30% of the amount recovered by the SEC.
Since the inception of the SEC’s Whistleblower Program, enforcement actions brought using information from SEC whistleblowers have resulted in more than $10 billion in monetary sanctions against wrongdoers and $2.5 billion returned to harmed investors. The SEC has paid more than $2 billion in awards to more than 300 whistleblowers. In fiscal year 2023 alone, the SEC paid nearly $600 million in whistleblower awards.
Youman & Caputo’s whistleblower team has experience bringing whistleblower tips to the SEC and includes a former SEC enforcement attorney.
To immediately access the resources at any point on this page, click the corresponding links below.
How Can Federal Securities Laws Be Violated?
What Is the SEC Whistleblower Reward Program?
Why Hire an Experienced SEC Whistleblower Lawyer?
Evidence to Submit in a Tip
What Are Tip Submission Requirements?
Can a Tip Be Submitted Anonymously Through a Law Firm?
What Happens After a Tip is Submitted?
Who Is Eligible for an Award Through an SEC Case?
How Is the Value of an SEC Whistleblower Reward Determined?
SEC Whistleblowers Are Protected Against Retaliation
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The SEC’s Enforcement Division investigates violations of the securities laws, which can include:
The U.S. Securities and Exchange Commission Whistleblower Reward Program encourages individuals to report possible violations of federal securities laws. The program provides incentives in the form of financial compensation as well as protection from retaliation to whistleblowers. If an individual gives the SEC information that leads to successful enforcement actions, he or she can be rewarded financially through the SEC Whistleblower Reward Program.
Since 2012, the SEC has paid more than $1.3 billion in 328 awards through its Whistleblower Reward Program. Fiscal year 2022 was the SEC’s second-highest year in terms of dollar amounts and number of awards, with $229 million given to whistleblowers in 103 awards. The top award was $40 million to two whistleblowers. If a whistleblower’s information leads to a successful action taken by the SEC, the person who reported the violation could receive an award in the form of 10 to 30 percent of the total monetary sanctions collected by the enforcement action.
Youman & Caputo’s whistleblower team, which includes a former SEC Enforcement attorney, can assist you with evaluating your information and advise you regarding the securities laws that may apply. Your attorney can help you decide what aspects of your case may be of most interest to the SEC and can assist you with presenting your information to the SEC.
Your attorney can navigate your case for you and protect your rights every step of the way. You can receive important information and advice from your SEC whistleblower lawyer, including critical guidance on a wide range of issues relating to your case. Look for an attorney with years of experience handling whistleblower cases, and one who is willing to dedicate personal time and attention to your case.
In fiscal year 2022, the SEC received more than 12,300 whistleblower tips. This was the largest number of tips the Commission has received in a fiscal year since the start of the program. If you wish to submit a tip under the SEC Whistleblower Program, you must provide information regarding the alleged violation of a federal securities law and support it with evidence, such as:
The quality of your evidence is crucial in establishing a credible claim. An experienced SEC whistleblower attorney can help you preserve, collect and submit evidence to support your tip. This will increase the likelihood of the SEC taking action and initiating an investigation after receiving your tip. Your attorney can submit evidence on your behalf to protect your identity.
Though whistleblowers are often employees of the companies about which they are submitting information, an employment relationship is not required to submit a successful tip.
To submit a successful tip under the SEC Whistleblower Program:
At Youman & Caputo, we are highly selective about the SEC Whistleblower cases that we accept.
We generally will not handle an SEC Whistleblower claim unless the securities law violations at issue are likely to result in a government recovery of at least $10 million.
We then invest significant time and resources in those cases that we accept to maximize the chance of obtaining an award for our client.
This allows our whistleblower attorneys to focus on your case and provide you with the dedicated attention you deserve.
The public never learns the identity of many SEC whistleblowers. You can submit your whistleblower tip to the SEC anonymously if an attorney makes the submission on your behalf. You must disclose your identity to the SEC in order to collect an award, but the SEC is typically still required to protect your identity. In some less common circumstances, the SEC must disclose the identity of whistleblowers.
Once you or your attorney submits a tip to the SEC, attorneys from the Office of Market Intelligence will evaluate the tip. If they find that the tip is specific, credible and timely, they will assign other members of SEC staff to investigate further. During the investigation, a member of the SEC may contact you or your representative if he or she needs more information. However, you should not expect updates regarding the investigation from the SEC, as most of this information is kept confidential. Your attorney can keep you updated about your tip as much as possible throughout the investigative process.
If the SEC finds sufficient evidence of a securities law violation, it may decide to take legal action against the individual or entity named in your tip or involved in the incident. This can include administrative proceedings, a civil lawsuit, or a referral to the Department of Justice for criminal prosecution. If settlement negotiations or a lawsuit in federal court result in monetary sanctions being awarded to the SEC that exceed $1 million, you may be eligible for a percentage of the amount obtained as a whistleblower award.
Most individuals can become eligible to receive awards through the SEC Whistleblower Reward program, regardless of U.S. citizenship status. Any individual who provides information that leads to a successful enforcement action by the SEC may be eligible for a monetary award. Whistleblowers who are eligible for an award include:
Anyone who voluntarily provides original information that the SEC does not already know about a securities fraud could be eligible for a reward through the program. However, a whistleblower will only receive an award if an SEC enforcement action related to the tip or information results in monetary sanctions exceeding $1 million. In addition, certain individuals – such as those convicted of a criminal violation related to the SEC enforcement action – are excluded from eligibility for an award.
As of December 2020, a Whistleblower Rule Amendment created a presumption of a maximum award of 30 percent in certain circumstances where the award will not exceed $5 million. This presumption applies to most cases and was used in 90 percent of the awards the SEC issued in fiscal year 2022. However, the SEC will determine the appropriate value of a whistleblower award based on the specific circumstances. If the 30-percent presumption does not apply to a case, the factors used to determine an award amount are as follows.
Factors that may increase the amount of a whistleblower’s award:
Factors that may decrease the amount of a whistleblower’s award:
These factors may increase or decrease an award percentage between 10 and 30 percent of the total monetary sanctions collected. When applying these factors, the SEC may consider the dollar amount of a potential award for increasing the amount, but may not consider it for decreasing the amount. If more than one whistleblower is involved in a case, the SEC will use the above-mentioned factors to determine how to allocate percentages of awards among the whistleblowers.
Do not stay silent about potential securities fraud for fear of retaliation by your employer, a corporation or another party. The Dodd-Frank Act prohibits retaliation against whistleblowers who take lawful action to raise concerns about potential securities violations. Retaliation may take the form of adverse employment action, such as job termination or demotion. Retaliation may also involve discrimination or harassment. A retaliation claim filed by your attorney may lead to financial compensation awarded in the form of job reinstatement, back pay, litigation costs and emotional distress.
If you are aware of such conduct and want to learn more about the SEC whistleblower claims and how we can help you obtain an award for exposing securities fraud, please contact us to schedule a free consultation. Learn more about our team of whistleblower attorneys by clicking here.