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Difference between revisions of "SEC Whistleblower Program"
→Tip #4: Know the Rules Before Filing with the SEC
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whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. | whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. | ||
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.” | Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.” | ||
== Tip #5: Draft a Tip that Grabs the SEC’s Attention == | |||
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions: | |||
#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.” | |||
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them. | |||
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel). | |||