SEC Whistleblower Attorney

How the SEC Whistleblower Reward Program Works

The SEC whistleblower reward program, established under 15 U.S.C. § 78u-6, creates a financial incentive for individuals who come forward with original information about violations of the securities laws. When the Commission brings a covered judicial or administrative action that results in monetary sanctions exceeding $1,000,000, eligible whistleblowers may receive an aggregate award of not less than 10 percent and not more than 30 percent of what has been collected. No contract with the Commission is necessary to receive an award. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

If you are considering coming forward, working with an experienced SEC whistleblower attorney can help you understand the statutory process, submit information in the required form, and protect your identity and employment rights. The sections below explain how the statute works and who may qualify.

What Counts as “Original Information”

Under 15 U.S.C. § 78u-6, “original information” means information that is derived from the independent knowledge or analysis of a whistleblower, is not known to the Commission from any other source unless the whistleblower is the original source, and is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media — unless the whistleblower is a source of that information.

The key distinction is that the information must come from your own knowledge or analysis. If you observed conduct directly — inside a company, a brokerage, an investment fund, or an accounting firm — that information may qualify even if the general subject matter has received some public attention, provided you are the source of the specific facts you are reporting.

The $1,000,000 Threshold Requirement

An award is available only in connection with a “covered judicial or administrative action” — defined as any judicial or administrative action brought by the Commission under the securities laws that results in monetary sanctions exceeding $1,000,000. “Monetary sanctions” includes any monies, including penalties, disgorgement, and interest, ordered to be paid, as well as any monies deposited into a disgorgement fund or other fund pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

Where Award Funds Come From

Awards are paid from the Securities and Exchange Commission Investor Protection Fund, a fund established in the Treasury of the United States. The Fund is available to the Commission for paying awards to whistleblowers and is funded through monetary sanctions collected by the Commission in qualifying actions.

Who Qualifies — and Who Does Not

The statute defines a “whistleblower” as any individual — or two or more individuals acting jointly — who provides information relating to a violation of the securities laws to the Commission, in a manner established by rule or regulation by the Commission. Certain categories of individuals are barred from receiving awards regardless of the information they provide.

Eligible Whistleblowers

Anyone with independent knowledge or analysis of a potential securities law violation may fall within the statute’s definition of “whistleblower.” Under 15 U.S.C. § 78u-6, this includes individuals working inside publicly traded companies, brokerages, investment funds, accounting firms, or any other organization subject to the securities laws. Potentially reportable conduct could include financial statement manipulation, undisclosed conflicts of interest, and insider trading — the kinds of matters the Commission pursues through judicial or administrative enforcement actions.

Individuals Barred from Receiving an Award

The statute bars awards to any whistleblower who is, or was at the time they acquired the original information, a member, officer, or employee of an appropriate regulatory agency, the Department of Justice, a self-regulatory organization, the Public Company Accounting Oversight Board, or a law enforcement organization. Awards are also barred for any whistleblower who is convicted of a criminal violation related to the action for which they otherwise could receive an award, for those who gained the information through the performance of a financial statement audit in a manner contrary to the applicable statutory requirements, and for those who fail to submit information to the Commission in the form the Commission requires.

The Award Range and How the Commission Sets the Amount

When the Commission collects monetary sanctions in a qualifying action, 15 U.S.C. § 78u-6 requires that the aggregate award paid to eligible whistleblowers be not less than 10 percent and not more than 30 percent of what has been collected. No assurance exists that any particular submission will result in an enforcement action or an award; the law provides for a structured process with a defined reward range when the statutory conditions are met.

Factors the Commission Weighs Within the Range

The Commission retains discretion to set the precise percentage within the 10–30 percent range. Under the statute, the Commission shall take into consideration the significance of the information provided by the whistleblower to the success of the covered action, the degree of assistance provided by the whistleblower and any legal representative of the whistleblower, and the programmatic interest of the Commission in deterring violations of the securities laws by making awards to whistleblowers who provide information that lead to successful enforcement.

Appeals of Commission Determinations

Under 15 U.S.C. § 78u-6, any Commission determination — including whether to make an award and to whom — except the determination of the amount of an award if the award was made in accordance with the statutory range, may be appealed to the appropriate court of appeals of the United States not more than 30 days after the determination is issued by the Commission.

How to Report to the SEC — Including Anonymously

Information must be submitted to the Commission in the manner established by Commission rule or regulation. The statute expressly permits anonymous submissions and prohibits employers from retaliating against whistleblowers for lawful acts taken in connection with reporting. Understanding these protections before you submit is one reason many individuals choose to consult an experienced qui tam and whistleblower attorney before taking any step.

Anonymous Submissions

A whistleblower who wishes to remain anonymous may submit information and make a claim for an award anonymously, provided they are represented by counsel. Under 15 U.S.C. § 78u-6, prior to the payment of any award, the whistleblower must disclose their identity and provide such other information as the Commission may require, directly or through counsel. The Commission and its officers and employees are prohibited from disclosing information that could reasonably be expected to reveal a whistleblower’s identity, except in limited, defined circumstances.

Anti-Retaliation Protections

The statute prohibits any employer from discharging, demoting, suspending, threatening, harassing — directly or indirectly — or in any other manner discriminating against a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower in providing information to the Commission, in initiating, testifying in, or assisting in any Commission investigation or action, or in making disclosures required or protected under the Sarbanes-Oxley Act of 2002 or other applicable law. An individual who alleges such discrimination may bring an action in the appropriate United States district court.

Relief for an individual prevailing in a retaliation action may include reinstatement with the same seniority status the individual would have had but for the discrimination, 2 times the amount of back pay otherwise owed with interest, and compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees. A retaliation action generally may not be brought more than 6 years after the date the violation occurred, or more than 3 years after the date when facts material to the right of action are known or reasonably should have been known — and in no circumstance more than 10 years after the date on which the violation occurs.

If practices like these look familiar from your own workplace, you can discuss what you have seen with a Price Armstrong attorney confidentially and at no cost. Call (888) 670-9542 or use the secure evaluation form below.

Frequently Asked Questions

Do I need a contract with the SEC to receive a whistleblower award?

No. Under 15 U.S.C. § 78u-6, no contract with the Commission is necessary for any whistleblower to receive an award under the statute, unless otherwise required by the Commission by rule or regulation. What is required is that the whistleblower voluntarily provided original information that led to the successful enforcement of a covered action resulting in monetary sanctions exceeding $1,000,000. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

What percentage of the sanctions could a whistleblower receive?

The statute sets an aggregate award range of not less than 10 percent and not more than 30 percent of what has been collected in a qualifying action. Under 15 U.S.C. § 78u-6, the Commission retains discretion to set the precise amount within that range based on factors including the significance of the information provided and the degree of assistance the whistleblower and their counsel provided. No assurance exists that any submission will result in an award.

Can my employer retaliate against me for reporting to the SEC?

The statute expressly prohibits retaliation: no employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against a whistleblower in the terms and conditions of employment because of lawful acts taken in connection with reporting to the Commission or assisting in a Commission investigation or action. A whistleblower who believes they have suffered retaliation may bring a civil action in the appropriate United States district court and, if they prevail, may be entitled to reinstatement, 2 times back pay with interest, and compensation for litigation costs and reasonable attorneys’ fees.