October 14, 2019

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Can I report financial fraud and receive an SEC whistleblower award?

Whistleblower Awards for Reporting Financial Fraud

Yes. Under the SEC Whistleblower Program, eligible whistleblowers may receive monetary awards when they voluntarily provide the SEC with original information about violations of the federal securities laws, including accounting and financial fraud. If the SEC uses a whistleblower’s information to bring a successful enforcement action, the whistleblower is eligible to receive 10% to 30% of the monetary sanctions collected as an award. In certain circumstances, the SEC allows auditors and accountants to report financial fraud and become eligible for awards.

On August 30, 2016, the SEC issued a more than $22 million whistleblower award to a whistleblower who exposed financial violations at Monsanto. The SEC fined the company $80 million for the violations, of which 27.5% was issued to the whistleblower as an award. In the press release announcing the award, former SEC Chair Mary Jo White said, “Financial reporting and disclosure cases continue to be a high priority for the Commission and these charges show that corporations must be truthful in their earnings releases to investors and have sufficient internal accounting controls in place to prevent misleading statements.”

Anonymously Report Financial Fraud to the SEC

The SEC Whistleblower Program protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. Also, the program allows whistleblowers to report financial fraud anonymously if represented by an attorney. In certain circumstances, a whistleblower may remain anonymous, even to the SEC, until an award determination. However, even at the time of an award, a whistleblower’s identity is not made available to the public.

SEC Targets Financial Fraud

According to the SEC Annual Reports on the SEC Whistleblower Program, since 2011 a majority of whistleblowers tips submitted to the SEC relate to violations with corporate disclosures and financials. In 2013, the SEC Division of Enforcement established the Financial Reporting and Audit (FRAud) Task Force to enhance the agency’s ability to root out financial fraud. In 2014, the SEC saw a 40% increase in financial reporting and auditing filed actions and investigations. In 2015, the SEC listed financial fraud as one of its top enforcement priorities, noting: “Pursuing financial reporting and auditing violations continues to be a focus of the Division.”

SEC Whistleblower Awards

Since the inception of the whistleblower program, the SEC has paid more than $250 million to whistleblowers. The largest SEC whistleblower awards to date are $50 million and $33 million. Tips from whistleblowers have lead the SEC to successful enforcements actions resulting in more than $1 billion in financial remedies.

To learn more about the SEC Whistleblower Program, download the eBook SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.

© 2019 Zuckerman Law

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About this Author

Jason Zuckerman, Whistleblower Litigation Attorney, Washington DC  Law Firm
Principal

Described by the National Law Journal as a “leading whistleblower attorney,” Jason Zuckerman litigates whistleblower ...

(202) 262-8959
Matthew Stock, CPA, Auditor, Zuckerman Law Firm
Certified Public Accountant

Matthew Stock is an associate at Zuckerman Law, where his practice focuses on representing whistleblowers in whistleblower rewards and whistleblower retaliation cases. He is also a Certified Public Accountant, Certified Fraud Examiner, and former KPMG external auditor.

As an auditor, Mr. Stock developed an expertise in financial statement analysis, internal controls testing, and fraud recognition. At Zuckerman Law, Mr. Stock uses his auditing experience to help whistleblowers investigate and disclose to the government complex financial frauds. In addition, Mr. Stock routinely assists whistleblowers in Sarbanes-Oxley whistleblower retaliation cases analyze a wide range of accounting issues, including revenue recognition, earnings management, and financial statement fraud.

202-930-5901