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Whistleblowing at the Right Time for the SEC

The Securities and Exchange Commission (SEC) Office of the Whistleblower rejected a claim for an award earlier in the summer because it was not “original” under the SEC’s whistleblower law. The claimant originally filed a report of accounting fraud in 2006. The SEC pursued the claim and a consent judgment for penalties, disgorgement and interest was entered. However, the claim was not eligible for an award because it was not original information according to SEC’s whistleblower law.

To collect an award

The SEC pays an award to a tipster when the whistleblower voluntarily provides original information to the SEC that causes a successful enforcement in a federal court or administrative action in which the SEC collects a penalty of more than $1 million.

What is original information?

The SEC’s whistleblower law requires that original information must:

  • Be developed from your own knowledge or independent thinking
  • Not be known to the SEC
  • Not be exclusively developed from an allegation in a hearing
  • Reported to the SEC’s Office of the Whistleblower after its effective date of July 2010

The law explains that “independent knowledge and analysis” means information that is not derived from public sources alone.

The amount of the award

The amount of the award given to a tipster whose disclosure leads to enforcement in court is 10 percent to 30 percent of what the SEC collects from the defendant. While the SEC has sole authority to decide the amount of an award, it evaluates the following factors:

  • The value of the information given by the tipster
  • How helpful the informant was throughout the process
  • The effect the award is likely to have on deterring future misconduct
  • Whether the whistleblower was culpable
  • The promptness of the tipster report

Even if you possess valuable information of fraud, corruption and misconduct, to merit receiving an award, it is crucial to comply with every detail of the whistleblower law. An experienced Texas whistleblower attorney can provide valuable guidance.

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In his new book, "Standing Up to China: How a Whistleblower Risked Everything for His Country," former client & Author, Ashley Yablon, quotes Attorney Steve Kardell about Whistelblower Law.
  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

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  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

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