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How to “Perfect” an SEC Whistleblower Tip to Qualify for an SEC Whistleblower Award

The rules of the SEC Whistleblower Program require whistleblowers to follow certain procedures when submitting a tip to the SEC. A failure to comply with these rules could render a whistleblower ineligible for an award, even if they provided original information to the SEC that lead to a successful enforcement action. The SEC recently amended the rules of the program to permit whistleblowers who originally failed to comply with certain procedures to fix, or “perfect,” their SEC whistleblower tips and become eligible for awards. As detailed below, the new rules require whistleblowers to act quickly to perfect their tips – so do not delay.

SEC Whistleblower Program 

Under the SEC Whistleblower Program, whistleblowers are eligible for an award when they provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards range from between 10% and 30% of the money collected when the sanctions exceed $1 million. The SEC Whistleblower Program allows a whistleblower to submit a tip anonymously to the SEC if represented by an attorney.

Since the inception of the program, enforcement actions stemming from whistleblower tips have resulted in more than $3.5 billion in financial remedies and the SEC has paid nearly $1 billion in awards to whistleblowers. The largest SEC whistleblower awards to date are $114 million and $50 million.

Required Procedures When Submitting an SEC Whistleblower Tip

The SEC Whistleblower Program’s rules require whistleblowers or their attorneys to file tips through the SEC’s online portal or by submitting a Form-TCR by mail or fax. See Rule 21F-9(a). In addition, a whistleblower must declare under penalty of perjury at the time they submit their information to the SEC that their information is true and correct to the best of their knowledge and belief. See Rule 21F-9(b). The SEC has treated the failure to file a properly executed TCR as grounds for denial of a claim for award.

Amended Rules Allow Whistleblowers to “Perfect” SEC Whistleblower Tips

On September 23, 2020, the SEC adopted amendments to the rules governing the SEC Whistleblower Program. Under the amended rules, a whistleblower who originally failed to comply with Rules 21F-9(a) and (b) can perfect their SEC whistleblower tip by submitting a properly executed TCR:

  1. Within 30 days of first providing information to the SEC; or

  2. Within 30 days of first learning of the requirements, e.g., if a whistleblower first learns of the requirements after retaining an attorney in connection with their submission. See Rule 21F-9(e).

On February 25, 2021, the SEC issued awards totaling more than $1.7 million to two whistleblowers who originally failed to comply with the rules, but then perfected their SEC whistleblower tips within 30 days of learning about the procedural requirements. According to the press release announcing the awards: “As these awards show, deserving whistleblowers may receive an award if they comply with the Form TCR filing requirements within 30 days of first obtaining actual or constructive notice of the filing requirement or 30 days from the date the whistleblower hires a lawyer to represent them in connection with the whistleblower’s previous submission of information to the Commission, whichever occurs first, and they otherwise meet the eligibility requirements.”

Takeaway for SEC Whistleblowers

It is not uncommon for a whistleblower to provide original information to the SEC and assist in an investigation, only to realize years later that they did not file a properly executed TCR. Whistleblowers should ensure that they complied with Rules 21F-9(a) and (b) in order to be eligible for an award. Whistleblowers should consult with an experienced SEC whistleblower attorney if they are uncertain about whether they followed the procedures correctly. Fixing any missteps could be the difference between a multimillion-dollar award, or no award at all.

© 2021 Zuckerman LawNational Law Review, Volume XI, Number 159
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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 whistleblowe r retaliation, whistleblower rewards, wrongful discharge, and other employment-related claims. His practice focuses on representing senior executives and senior professionals in high-...

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

Matthew Stock is the Director of the Whistleblower Rewards Practice at Zuckerman Law. He is an attorney, Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor. Mr. Stock has audited a broad range of industries, both domestically and internationally, including large public companies and financial institutions. As an auditor, Mr. Stock developed an expertise in financial statement analysis and fraud recognition.

At Zuckerman Law, Mr. Stock leverages his experience as an attorney, CPA, CFE and external auditor to...

202-930-5901
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