SEC Whistleblower Program: Reporting Securities Fraud Anonymously
The Securities and Exchange Commission whistleblower program, created by Dodd-Frank, pays 10 to 30 percent of monetary sanctions exceeding 1 million dollars. Unlike a False Claims Act case, you can remain anonymous to the SEC and to your employer throughout, provided an attorney submits on your behalf.
Full anonymity is the defining feature
This is the practical difference between the SEC program and a qui tam case. A False Claims Act complaint is sealed during the investigation, but if the case proceeds your name appears as relator.
An SEC submission filed through counsel can stay anonymous permanently. The Commission communicates with your attorney, and you can collect an award without the company ever learning who reported. For employees whose industry is small or whose position would identify them immediately, this often decides which route to take.
What the program covers
Any violation of the federal securities laws qualifies where it leads to sanctions above the threshold.
- Accounting fraud, revenue recognition manipulation, and improper reserves
- Disclosure failures and misleading statements to investors
- Foreign Corrupt Practices Act violations, including bribery of foreign officials
- Insider trading and front-running
- Market manipulation and undisclosed conflicts of interest
- Investment adviser fee and expense misallocation
- Failure to maintain adequate internal accounting controls
How awards are calculated
Awards run from 10 to 30 percent of monetary sanctions collected where those sanctions exceed 1 million dollars, and the percentage can be applied to related actions by other agencies as well.
Factors that raise the percentage are the significance of the information, the assistance provided, the law enforcement interest, and whether you reported internally first. Factors that lower it are culpability, unreasonable delay, and interference with internal compliance systems.
Employers cannot silence you by contract
Rule 21F-17 prohibits taking any action to impede someone from communicating with the Commission about a possible violation, including through a confidentiality agreement.
The SEC has enforced this repeatedly, penalizing companies for severance and employment agreements that required employees to waive award rights or notify the company before contacting regulators. If your agreement contains that language, it does not bind you.
Frequently asked questions
Can I really stay anonymous?
Yes, if an attorney submits on your behalf. You remain anonymous to the Commission and to your employer, including at the point an award is paid.
Do I have to work for the company?
No. Outsiders including analysts, competitors, and counterparties have received awards. What matters is that the information is original and voluntarily provided before any request from the Commission.
Should I report internally first?
It is not required and it carries risk of exposure, but the SEC treats internal reporting as a factor that can increase an award. If you report internally and the company self-reports, you can still be credited. Discuss the order with counsel.
What if the sanctions come to less than 1 million dollars?
No award is payable below that threshold, though sanctions from related actions by other authorities can be aggregated toward it.
The attorneys who handle these cases
Related reading
Talk to a whistleblower attorney before you report
A conversation costs nothing and is confidential. We will tell you honestly whether what you have describes a case, and what the first-to-file rule means for your timing.