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Difference between revisions of "SEC Whistleblower Program"
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'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.''' | '''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.''' | ||
== Disadvantages to Submitting a Tip Anonymously == | |||
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages. | |||
'''When Submitting the Form TCR''' | |||
Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC. | |||
For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip. | |||
'''When the SEC Investigates a Whistleblower's Tip''' | |||
If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters. | |||
Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity. | |||
'''Disclosing the Identity of the Whistleblower''' | |||
Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies. | |||
In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip. | |||