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What You Need to Know About Filing an SEC Whistleblower Claim

The U.S. Securities and Exchange Commission’s (SEC) whistleblower program gives would-be tipsters an opportunity to earn a significant amount of money for reporting unique and actionable information on fraud and other wrongdoing in their companies or government agencies. Most recently the organization paid out $50 million to a pair of financial whistleblowers, but there have been plenty of high-profile awards made over the years.

To that end, if you have information to report to the SEC, what do you need to know? Here are some of the basics:

  • The information you have must be original and voluntarily provided: You will not be eligible to receive a whistleblower award through the SEC program if you provide information the SEC already had, or if you were compelled by some sort of investigation, demand or court order to provide that information.
  • Some people in certain roles are not eligible: Not just anyone is eligible for a whistleblower award. Attorneys, auditors, corporate officers and various compliance personnel are only allowed to participate in the program under very specific circumstances, those being a “reasonable belief” that SEC disclosure is necessary to prevent substantial damage to the entity or investors who would be harmed. These types of workers can also participate in the program if more than 120 days have passed since the whistleblower reported information internally to an audit committee, but the organization took no action.
  • You may be required to report internally first: There are some incentives for whistleblowers to use their own internal compliance programs before going to the SEC, but it will still take timely and high-quality tips directly. That being said, you should be aware of the risks associated with internal reporting, and seek legal representation for guidance through the process.
  • Have a clear case: Sometimes it is not just enough to have unique information. That information also has to be compelling. The more detailed your report and the more valuable the potential case, the more likely it is the SEC will take it on.

For further information on filing a claim with the SEC whistleblower program, work with an experienced attorney at Kardell Law Group.

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