For the first time, there are now meaningful monetary incentives for individuals to come forward and report possible securities violations.
Although federal programs that provide monetary awards for whistleblowers have been around since the Civil War, for the first time, the Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the payment of monetary awards to individuals that report possible violations of the federal securities laws to the SEC. Under the Act, the SEC is required to pay eligible whistleblowers 10-30% of the monetary sanctions collected as a result of a successful SEC enforcement action in which the sanctions exceed $1 million. If this threshold is met, whistleblowers may also be eligible for a similar award based upon the monetary sanctions collected in related enforcement actions brought by other regulatory and law enforcement organizations.
To determine the amount of a whistleblower award, the SEC will consider a variety of factors. Certain criteria may increase an award—such as the significance of the information provided by the whistleblower, the assistance provided by the whistleblower, the law enforcement interest in making an award, and the participation of the whistleblower in internal compliance systems. Other factors may decrease an award—such as the culpability of the whistleblower, unreasonable reporting delay by the whistleblower, and interference with internal compliance and reporting systems by the whistleblower.
Potential monetary awards could be substantial. To put this in context, consider that in Fiscal Year 2011, the SEC secured $2.8 billion in monetary sanctions. In several cases, sanctions exceeded $100 million significantly, these figures do not include the monetary sanctions collected in related enforcement actions by other regulatory and law enforcement organizations, such as the Department of Justice. To ensure that adequate funds are available to pay whistleblower awards, Congress has established a replenishing Investor Protection Fund, which at the close of Fiscal Year 2011, had more than $450 million in it.
Please note, whistleblowers may also be eligible for monetary awards under other state and federal whistleblower programs.
To learn more about available monetary incentives or to request a case evaluation, potential whistleblowers may contact our Whistleblower Representation Team in any number of ways – by telephone, email, or electronic submission through this website. All initial legal consultations and case evaluations are free and confidential. Potential whistleblowers may also request anonymity. For international whistleblowers, language translation services are available upon request.