Whistleblower Litigation

SEC Whistleblower Program Explained

The Dodd-Frank SEC Whistleblower Program, 15 U.S.C. § 78U-6, provides substantial monetary rewards to whistleblowers who voluntarily provide original information to the SEC concerning fraud in securities markets that results in a successful enforcement action with monetary sanctions exceeding $1 million. The whistleblower must retain a reasonable belief that the information he or she provides constitutes a violation of federal securities laws or regulations.

In the wake of our nation’s most recent financial crisis, Congress passed and the President signed into law a set of laws and regulations intended, among other things, to enforce standards against fraud in our securities markets by providing incentives for whistleblowers to report fraud to the SEC by sharing information on fraud that has occurred, is ongoing or will soon occur.

When the following requirements are satisfied, under regulations adopted by the SEC, whistleblowers will receive rewards in an aggregate amount between 10 and 30 percent of what has been collected by the SEC of the monetary sanctions imposed in a given case that is. A whistleblower must make sure that: the information is voluntarily provided to the SEC; the information is original; and the information leads to a successful enforcement action resulting in monetary sanctions of more than $1 million, the SEC. Importantly, these whistleblower rewards can also include recoveries for any “related actions” that might be brought by certain other federal or state authorities, including the Department of Justice.

The SEC Whistleblower Program began in 2011 and has resulted in the payment of tens of millions of dollars to several whistleblowers. Most securities fraud investigations take considerable time to complete and bring to the point of an enforcement action and resolution. It is widely expected that several significant awards will be forthcoming under the SEC Whistleblower Program each year.

It is critically important, at times determinative, for SEC whistleblowers to consult with and retain qualified securities fraud attorneys to investigate, develop and submit a whistleblower claim to the SEC on the whistleblower’s behalf. This is true for several reasons:

First, an SEC whistleblower who retains qualified, experienced securities fraud whistleblower counsel may properly submit his or her information to the SEC through that whistleblower counsel with complete anonymity. That anonymity is maintained throughout the investigation.

Second, the SEC has been deluged with thousands of potential whistleblower matters since 2011. Separating quality cases from dead-end leads takes enormous time and resources. A high-caliber submission filed by experienced SEC whistleblower attorneys with high standards will get attention and focus immediately and ensure the maximum effect and reward from your whistleblower case

Third, a law firm with broad experience litigating securities fraud can help a whistleblower determine the strength of his or her allegations and help develop the correct legal theories and factual allegations necessary to build a strong case. Such counsel can also advise whether a claim might more properly be, or additionally be, filed under the CFTC or IRS programs or the False Claims Act.

Hagens Berman represents several whistleblower actions under the CFTC and SEC Whistleblower Programs, including representation of high-profile market expert Haim Bodek, and marshals its significant nationwide resources and expertise in financial fraud to best present whistleblower matters to the SEC and CFTC.