For many years, citizens, employees or customers that have suspected any type of unlawful practice regarding federal securities laws, hesitated to report the infraction. The reason for this fear, more times than not, centered around retaliation or lack on anonymity. After the financial crisis in 2007-2008, congress dentifrice this lack of reporting as a check and balance that might have helped to avert the crisis. As a result, in 2010, the SEC Whistleblower Program was developed and deployed. The programs primary goal is to make it more palatable for those suspecting securities wrongdoing, have a safe and confidential method to report their concerns.
For the most part, anyone can use the Whistleblower program. The whistleblower does not have to have any direct engagement with the suspected organization. This widens the number of individuals who can report and helps to “widen the net” and increases the visibility on organizations and their practices.
To file a complaint, the accuser would enlist the assistance of a SEC Whistleblower attorney. Together, they would complete and return the required Whistleblower submission. Given the vast number of tips that the SEC receives, the level of detail, exhibits and fact sheets in order to receive a heightened level of interest from the SEC to investigate and decision. Over 4000 tips from this program alone come in to the SEC, completeness and detail are necessary in order to catch the eye of the regulators.
The tip, once received, is given an initial review of the detail contained in the complaint and determines if there is a potential violation of federal security laws that needs to be investigated. Once it is determined that the tip has merit, it is passed to the Enforcement Division. The tip will then be fully investigated, decisioned and if an enforcement action is determined (wrong-doing confirmed), a potential reward might be granted to the Whistleblower. Rewards are normally given to “original” submissions with data that directly led to the enforcement action. The timing of the award, on average, can run between 12 months to 18 months. Lastly, if an award request is declined by the SEC, there is a full appeal process that the Whistleblower can file for reconsideration.