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SEC Office of the Whistleblower

What is the SEC Office of the Whistleblower?

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors. To date, the SEC Office of the Whistleblower has issued more than $381 million in awards to whistleblowers.

SEC Whistleblower Rules

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected. The SEC considers positive and negative factors when determining an award percentage. The largest SEC whistleblower awards to date are:

  • $50 million

  • $39 million

  • $37 million

  • $33 million

  • $30 million

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

SEC Office of the Whistleblower’s Early Success

As detailed in the SEC Whistleblower Reward Program’s 2018 Annual Report to Congress, the program has enjoyed a remarkable run of success since the SEC Office of the Whistleblower first opened its doors in 2011. In fiscal year 2018, the SEC paid whistleblower awards totaling $168 million, including the three largest SEC whistleblower awards in the program’s history. And during fiscal 2018, the SEC Office of the Whistleblower received more than 5,200 tips, an increase of approximately 67% since fiscal year 2012. Since 2011, the SEC Office of the Whistleblower has received nearly 28,000 tips, some of which have enabled the SEC to recover more than $1.7 billion in monetary sanctions from wrongdoers. The most common tips submitted to the SEC Office of the Whistleblower relate to:

  • Accounting fraud;

  • Investment and securities fraud;

  • Insider trading;

  • Foreign bribery and other FCPA violations;

  • EB-5 investment fraud;

  • Manipulation of a security’s price or volume;

  • Fraudulent securities offerings and Ponzi schemes;

  • Hedge fund fraud;

  • Unregistered broker-dealers;

  • Investment adviser fraud;

  • Anti-money laundering (AML) violations;

  • False or misleading statements about a company or investment;

  • Inadequate internal controls;

  • Deceptive non-GAAP financials;

  • Improper revenue recognition;

  • Violations of auditor independence rules;

  • Misleading or incomplete cybersecurity disclosures; and

  • Blockchain and cryptocurrency fraud.

In short, it appears that the SEC Office of the Whistleblower and its reward program are firing on all cylinders.

"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