SEC’s Whistleblower Program is Officially Launched

No Comment

On Friday, August 12, 2011, the Securities and Exchange Commission’s much discussed whistleblower program became effective with the launch of a new webpage for people to report a violation of the federal securities laws and apply for a financial award and the introduction of the new Office of the Whistleblower.

To be considered for an award, the final rules require that a whistleblower must:

  • Voluntarily provide the SEC …
    • In general, a whistleblower is deemed to have provided information voluntarily if the whistleblower has provided information before the government, a self-regulatory organization or the Public Company Accounting Oversight Board asks for it directly from the whistleblower or the whistleblower’s representative.
  • … with original information …
    • Original information must be based upon the whistleblower’s independent knowledge or independent analysis, not already known to the SEC and not derived exclusively from certain public sources.
  • … that leads to the successful enforcement by the SEC of a federal court or administrative action …
    • A whistleblower’s information can be deemed to have led to a successful enforcement action if:
    1. The information is sufficiently specific, credible and timely to cause the Commission to open a new examination or investigation, reopen a closed investigation, or open a new line inquiry in an existing examination or investigation.
    2. The conduct was already under investigation when the information was submitted, and the information significantly contributed to the success of the action.
    3. The whistleblower reports original information through his or her employer’s internal whistleblower, legal, or compliance procedures before or at the same time it is passed along to the SEC; the employer provides the whistleblower’s information (and any subsequently-discovered information) to the SEC; and the employer’s report satisfies prongs (1) or (2) above.
  • … in which the SEC obtains monetary sanctions totaling more than $1 million.
    • The rules permit aggregation of multiple SEC cases that arise out of a common nucleus of operative facts as a single action. These may include proceedings involving the same or similar parties, factual allegations, alleged violations of the federal securities laws, or transactions or occurrences.

A successful blower may be entitled to 10-30% of the SEC sanctions over $1 million.

Contact Evans & Kob for experienced regulatory and legal counsel regarding whistleblower claims or any broker-dealer and investment adviser, arbitration, regulatory or securities matter at info@eklawpc.com.

Relatived Posts
Net Worth Standard for Accredited Investors – Securities Act Release No. 9287 ( 23 Dec,2011 )
SEC Proposes Rules on Disclosure of Incentive-Based Compensation Arrangements at Financial Institutions ( 3 Mar,2011 )
Both FINRA and SEC Bring Actions Regarding Due Diligence on Unsuccessful Private Placements ( 8 Apr,2011 )
SEC Proposes Rule Amendments to Allow General Solicitation and General Advertising in Rule 506 Offerings ( 30 Aug,2012 )
SEC, FINRA Warn Retail Investors About Investing In Structured Notes With Principal Protection ( 3 Jun,2011 )