How long a U.S. Securities and Exchange Commission (SEC) Whistleblower Award takes can vary significantly from case to case. If the SEC receives a tip through its Whistleblower Program and finds sufficient evidence, it may order a formal investigation. If the SEC recovers at least $1 million as a result of that investigation, the SEC may pay an award to the whistleblower. The SEC is thorough; an investigation could take years before it results in a payout for a whistleblower.
If you wish to file an SEC whistleblower claim, learn more about the general timeline with help from an attorney at Youman & Caputo, LLC.
Review of the Tip, Complaint or Referral
First, the SEC’s Office of the Whistleblower will review the information submitted on the tip, complaint or referral (TCR) by a whistleblower. The preliminary review is an initial assessment of the information provided about a potential securities law violation. If the whistleblower hires an attorney, his or her identity can remain anonymous (even to the SEC) during an investigation. A preliminary review could take days or weeks. If the whistleblower submits additional information after the initial TCR, this could extend the review.
Investigation of the TCR
The preliminary review will determine whether or not the SEC will proceed with a formal investigation. If so, the SEC will initiate an investigation into the reported securities law violation. The investigation will begin with the information provided by the whistleblower but can extend to many types of evidence, such as market surveillance, investor complaints, media reports and documents from other SEC Divisions. SEC investigations can take a considerable amount of time. Complex cases may take multiple years.
Action Taken By the SEC
If the SEC finds evidence of a securities law violation, it has jurisdiction to take one or more enforcement actions against the alleged wrongdoer, including civil, criminal and administrative actions. It can take weeks, months, and sometimes years for the SEC to file complaints, initiate administrative proceedings and pursue other legal actions.
Monetary Sanctions Determination
Many securities fraud cases result in the SEC collecting monetary sanctions, such as disgorgement (money taken back from the wrongdoer that they obtained as a result of their illegal actions) and penalties (intended to punish and deter future bad conduct). The process of determining what sanctions the wrongdoer will pay can take a long time, as negotiations and additional legal processes may be involved.
Evaluation of Award Eligibility
Once the SEC has taken its desired action(s) against an alleged violator, the whistleblower’s eligibility for an award from the SEC Whistleblower Program will be determined. To be eligible for a reward, a whistleblower must have voluntarily provided original information about a federal securities law violation that led to a successful SEC action resulting in monetary sanctions valued at more than $1 million and satisfy certain other criteria. For reference, the SEC recently released their enforcement results for fiscal year 2023.
SEC Whistleblower Award Determination
If a whistleblower’s award eligibility is confirmed, the SEC has jurisdiction over how much he or she is awarded. The SEC has the authority to award a whistleblower between 10 to 30 percent of what the Commission collects in monetary sanctions against a violator. Determining an award percentage requires considering factors that are unique to the whistleblower, such as how long he or she took to file the complaint and how much the whistleblower or whistleblower’s attorney assisted with the SEC investigation. An award determination could take weeks to months.
The entire SEC whistleblower award process can take many years from the date that a tip or complaint is submitted to the final payout. Consult with an attorney at Youman & Caputo, LLC to discuss your eligibility requirements for a whistleblower award and specific case timeline.