An Introduction To The SEC’s Whistleblower Program
In 2010, the Securities and Exchange Commission, or SEC, established a whistleblower program under the Dodd-Frank Act. The program rewards individuals who provide the SEC with original information that leads to successful sanctions against a company for securities violations. It also provides protection against retaliation for employees who blow the whistle on their employers.
The SEC’s Whistleblower Wrogram
The SEC has about $452 million in its coffers to provide cash awards to whistleblowers who provide information that leads to a successful SEC investigation. Awards are available when sanctions against a company total $1 million or more. An individual may be awarded ten to 30 percent of the sum of the sanctions.
For example, the first SEC whistleblower award was paid in August 2012. The individual was awarded $50,000 for information leading to a successful investigation. The award was 30 percent of the total sanctions – the highest award available.
There are several big-ticket SEC investigations that may result in large awards for involved whistleblowers. One example is the investigation of JPMorgan Securities over irregularities in its bond sales. Total sanctions could reach the $32.5 million mark.
The SEC gets about 2,200 tips every year for securities fraud and other suspected SEC violations. Most tips come from the state of California, with the second-most coming from tipsters in New York.
Only individuals can be considered whistleblowers. Companies that tip off the SEC about possible violations are ineligible for cash rewards or the protections of the whistleblower program. Whistleblowers do not need to be the employees of the companies about which they provide information.
Whistleblowing employees can still be eligible for an SEC award if they initially report the violations to their employers and the employers subsequently report the wrongdoing to the SEC. In this case, the whistleblowing employee must contact the SEC within 120 days to ensure eligibility for the award. However, employees who blow the whistle on their employers but were somehow involved in committing the SEC violations will have the award he or she may receive reduced.
Whistleblower Protections Against Retaliation
The SEC whistleblower program also protects whistleblowers who tell on their employers from retaliation. The program prohibits employers from wrongfully firing, demoting, suspending or in any other way harassing a whistle blowing employee.
If an employee feels that he or she has been discriminated against due to informing the SEC of their company’s foul play, it is possible to bring a private suit against the company in federal court. If the employee can prove that discrimination occurred as retaliation for whistleblowing, the employee may be entitled to reinstatement, double back pay and reimbursement of attorneys’ and court fees and fees for expert witnesses.
To learn more about the SEC whistleblower program and how to hold your employer accountable for retaliation, contact an experienced employment law attorney.
