Securities Fraud – SEC Whistleblower Program

Securities fraud harms the public in many ways, none more profound than wiping out the life savings held in retirement savings accounts like IRAs, 401Ks and pensions of unsuspecting individuals, and none more problematic than causing economic uncertainty and instability in our domestic and world markets.

Following the 1929 stock market crash (also known as “Black Tuesday”), which triggered the Great Depression in the U.S. and the world, Congress recognized the paramount and continuing priority to protect our everyday life by demanding honest, accurate reporting and transparency in the investment and financial markets.  To do so, Congress enacted the Securities Act of 1933 and the Securities Exchange Act of 1934, which established oversight of the investment and financial markets through the formation of the U.S. Securities and Exchange Commission (“SEC”).

Most recently, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) to bolster its heightened priority to protect investors and provide further oversight to ensure the integrity, confidence and accuracy of the financial markets. Section 922 of Dodd-Frank added Section 21F to the Securities Exchange Act of 1934, which authorized the creation of the SEC Whistleblower Program to help detect and prevent fraud.  The final rules adopted by the SEC to provide procedures for the implementation of the SEC Whistleblower Program went into effect on August 12, 2011.

The SEC Whistleblower Program provides monetary incentives for individuals to come forward and report possible violations of the federal securities laws to the SEC.  Whistleblowers, due to their unique vantage point as insiders or persons with material knowledge, play a vital role in detecting financial fraud and revealing unethical practices within an organization that might otherwise remain hidden.  Whistleblowers’ contributions are essential to maintaining corporate integrity and protecting the public trust, as well as serving as a deterrent to potential wrongdoers.

Eligible SEC Whistleblowers may receive an award between 10% and 30% of the monetary sanctions collected in an SEC action or related actions that imposed sanctions in excess of $1 million.

Some states also provide awards for Whistleblowers who disclose securities law violations to state authorities.  Currently, state securities Whistleblower laws have been enacted in Indiana, Montana, Utah and Washington.

What Types of Fraud can be Reported Under the SEC Whistleblower Programs?

Generally, fraud can occur at every level of the investment and financial markets where wrongdoers attempt to avoid the securities laws and regulations to defraud others and/or obtain an unlawful advantage.  Investment and financial market fraud occurs primarily through misrepresentations and omissions about the value, cost, or nature of securities or other financial products or services, including accounting and financial reporting.

The scope of fraudulent activity in the investment and financial markets that a Whistleblower may be able to report under the SEC Whistleblower Program is vast and includes, but is not limited to, the following areas and types of fraud:

• Ponzi Schemes, Pyramid Schemes, or High-Yield Investment Programs
  • Payment on investments from funds derived from new investors, rather than from legitimate investment profits.
  • Fraudulent business models based on promises of payment of funds tied exclusively to one’s ability to enroll future members in the scheme, instead of actual profits from the business.
• Accounting Fraud
  • Accountants deceptively manipulate or fail to identify false information made by clients regarding their financial status.
• Theft or Misappropriation of Funds or Securities
• Market Manipulation of a Security’s Price or Volume to Improperly Mislead Market Participants
  • Front-running: trades placed in front of and based on advanced non-public knowledge of a client’s order.
  • Spoofing: placement of trade orders with the intent to cancel before execution, thereby creating an untrue picture of actual demand for or supply of the security.
  • Abusive Naked Shorting: improper and delayed clearing of “failure to deliver” short positions.
  • Pump and Dump: artificially boosting the price of an owned stock through false, exaggerated, or misleading positive statements, then selling the position at the puffed-up higher price.
  • Wash Trading: selling a quantity of a particular security to themselves, either directly or through a third party, to give the impression that there is higher demand for that security.
  • Window Dressing: deliberately placing orders in such a way as to artificially increase the closing price of a security.
• Insider Trading
  • Trading based on non-public, confidential material information to gain an unfair advantage over other investors and market participants.
• Fraudulent Securities Offerings, Including Failure to Register Securities Subject to Registration
• False or Misleading Statements About a Company in SEC Reports or Financial Statements
  • Companies offering securities to investors are required to tell the truth about their businesses, the securities being sold, and the risks involved with investing in the company.
  • People involved in the sale and trade of securities are required to treat investors fairly and honestly.
• Investment and Financial Professional Violations
  • Acting without required licenses.
  • Failure to disclose registration status, services offered, fees, or conflicts of interest.
  • Failure to safeguard client information from disclosure.
  • Putting their own interests before the interests of their clients (i.e., inappropriate recommendations for higher fees, unauthorized trading, or knowingly recommending unsuitable investments).
• Misrepresentations related to Initial Public Offerings (IPOs) and Special Purpose Acquisition Companies (SPACs)
• Bribery of, or Improper Payments to, Foreign Officials in Violation of the Foreign Corrupt Practices Act, Subject to Department of Justice Guidelines and Authorization
• Fraudulent Conduct Associated with Municipal Securities Transactions or Public Pension Plans
• Digital Investment Schemes and Fraud
  • Sale of unregistered Crypto currencies, securities, and commodities.
  • Fraudulent Crypto initial coin offering.
  • Non-Fungible Token (NFT) schemes.

The more specific, credible, and timely the Whistleblower’s information, including identifying individuals involved in the scheme, providing examples of fraudulent transactions, or pointing to non-public materials evidencing the fraud, the greater likelihood that the SEC will investigate the Whistleblower’s submission.

Who Qualifies as an SEC Whistleblower?

A Whistleblower under the SEC Whistleblower Program includes any person (including persons living outside the United States and non-U.S. citizens) who voluntarily provides in writing original information not previously known to the SEC about a possible violation of federal securities laws that has occurred, is ongoing, or is about to occur.

• A Whistleblower’s information is provided “voluntarily” if it is provided to the SEC or another regulatory or law enforcement authority before a request, inquiry, or demand that relates to the same subject matter is directed to the Whistleblower or their representative (i.e., an attorney).  Information provided to the SEC or another regulatory or law enforcement authority after receiving a request for that same information from the SEC or other government agency may not be found to have been provided voluntarily.
• “Original Information” is information derived from the Whistleblower’s independent knowledge (facts known to the Whistleblower that are not derived from publicly available sources) or independent analysis (evaluation of information that may be publicly available, but which reveals an analytical result that is not generally known) that is not already known by the SEC.
  • Certain information is deemed not to be “original information,” including information subject to the attorney-client privilege or information learned because the Whistleblower held certain titles at a company (such as attorney, corporate officer, director, auditor and compliance officer), and the Whistleblower learned the information from another person or through the entity’s internal reporting systems.  These individuals must satisfy additional requirements as potential Whistleblowers and must carefully analyze how they came to learn the information they want to report and any obligations they may have to report that information through other processes.
  • For a submission to qualify as “independent analysis,” the Whistleblower must do more than identify publicly available information and state that the information itself suggests a fraud or other violations.  To qualify, the Whistleblower must use the publicly available materials to show important insights into the possible violations of the securities laws that are not readily apparent from the face of the materials. For example, a detailed and highly sophisticated analysis or an analysis in non-obvious ways of the publicly available information that reveals patterns indicating possible violations that would not be otherwise inferable.
  • Mere identification of the hallmarks of fraud on the face of public materials will not suffice (e.g., press releases promising impossibly high, guaranteed investment returns or extravagant claims).
  • Whistleblowers do not have to be “insiders” or employees of the company to submit information about that company, or to have been harmed by the securities fraud in question.
  • The illegal conduct does not have to take place in the United States as long as it affects the U.S. market.

Are There Any Rules About Which Employees or Insiders Can be a Whistleblower?

Yes.  For certain employees or individuals in certain positions in a company, the SEC Whistleblower Program has rules that impose additional requirements before someone may become a Whistleblower.

For a narrow category of individuals, the SEC does not consider their information to be “original” or derived from “independent knowledge” or “independent analysis” due to their status and/or role with the company.  This includes anyone who:

• held certain titles at the company (such as officer, director, trustee, partner, auditor and compliance officer);
• was an employee of the company with compliance or internal audit responsibilities;
• was an employee of a firm retained to investigate possible wrongful conduct; or
• was an employee of a public accounting firm engaged as an independent public accountant under the federal securities laws.

Whistleblowers who learn information secondhand from these categories of individuals will also not be considered to be providing “original” information if they report the information to the SEC.

A Whistleblower who falls into one of these four narrow categories may still be eligible to be a Whistleblower, and to receive an award, if they satisfy one of the following:

• The Whistleblower reasonably believes that disclosure of the wrongful conduct to the SEC is necessary to prevent likely and substantial injury to the financial interest or property of the entity or investors;
• The Whistleblower reasonably believed that the entity was engaging in conduct that would impede an investigation of the misconduct (i.e., destroying documents, improperly influencing witnesses); or
• The Whistleblower, before reporting the wrongdoing to the SEC, waits at least 120 days from:
  • when they provided the information to the entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or their supervisor, or
  • when they received the information, if the Whistleblower received the information under circumstances indicating that the entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or their supervisor was already aware of the information.

Am I Required to Report Wrongdoing Internally Before Going to the Government?

It depends.  If the Whistleblower is a company officer, director, trustee, partner, auditor, compliance officer, or an employee (or contractor) with compliance or internal audit responsibilities (including those employed by firms hired to audit the entity or investigate violations), then there is a requirement to report internally to the entity first and to wait 120 days before reporting to the Government.  See “Are There Any Restrictions about which Employees or Insiders Can be a Whistleblower?” for more information if this applies to you.

For anyone else, there is no requirement to report internally at the company in order to receive an award.  By providing this flexibility, the SEC recognizes that the Whistleblower is in the best position to determine the effectiveness or ineffectiveness of their company’s internal compliance program.  However, participation in an internal compliance program is a factor considered in determining the appropriate award and may increase the award amount.  An experienced Whistleblower Attorney will help a potential Whistleblower to decide whether to report internally first before reporting to the SEC.

If the Whistleblower elects to report internally, then the Whistleblower must report to the SEC within 120 days of reporting internally to be eligible for an award.

When the Whistleblower reports the information to the DOJ within 120 days of reporting internally, then:

• the SEC will consider the Whistleblower’s information reported internally to be original information under the SEC Whistleblower Program (provided it is not already known by the SEC); and
• the SEC will consider the Whistleblower’s information to be reported to the SEC on the date it was reported internally and preserve the Whistleblower’s “place in line” in the event another Whistleblower provides the same or related information to the SEC in the interim.

If the Whistleblower’s company self-discloses the original information or the results of an investigation initiated by the Whistleblower’s internal report to the SEC, then the SEC will give the Whistleblower credit for all information provided by the company to the SEC, which may include information not provided by the Whistleblower in their internal report.  To receive this benefit, the Whistleblower must also report to the SEC within 120 days of reporting internally.

The above “lookback” provision and procedure also applies to original information voluntarily provided by the Whistleblower to Congress, any other authority of the Federal government, a state Attorney General or securities regulatory authority, any self-regulatory organization, or the Public Company Accounting Oversight Board, when the Whistleblower also reports the same information to the SEC within 120 days of providing it to one of these authorities.

How Does a Whistleblower Submit Information Under the SEC Whistleblower Program?

To become eligible for an award, Whistleblowers must submit their information directly to the SEC using the SEC’s “Tip, Complaint, or Referral,” or “TCR” forms and procedures.  The Whistleblower must personally execute a declaration under penalty of perjury on these forms in the sections provided.  Whistleblowers do not file a complaint in any court.

The Whistleblower does not have any right to participate as a party in any enforcement action brought by the SEC against the defendant(s).  If the SEC decides not to pursue an enforcement action, there is no option or mechanism for the Whistleblower to independently pursue their claims under the SEC Whistleblower Program.

If the Whistleblower provides information that leads to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million, the Whistleblower will have the opportunity to apply for a Whistleblower reward.

Generally, in SEC enforcement actions, the applicable statute of limitations is ten (10) years, beginning when the conduct giving rise to the claim occurred, not when it was discovered by authorities.

What are the Whistleblower Rewards?

To be eligible for an award, information provided by Whistleblowers must lead to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million.

The determination of the amount of an award is in the discretion of the SEC.  Assuming all eligibility conditions are met for a Whistleblower award, the SEC will then decide the percentage amount of the award.  The amount of award will be at least 10% and no more than 30% of the total monetary sanctions that the SEC and the other authorities were able to collect.  The percentage awarded in connection with an SEC action may differ from the percentage awarded in connection with a related action.

When the SEC makes awards to more than one Whistleblower in connection with the same action or related action, it will determine each Whistleblower’s individual award percentage.  The total amount awarded to all Whistleblowers in the aggregate will be at least 10% and no greater than 30% of the amount the SEC or the other authorities collect.

Whistleblowers may receive a reward of not less than 10% and up to 30% of any government recovery.  In determining the award percentage, the SEC considers factors such as the significance of the Whistleblower’s information and the extent of the Whistleblower’s assistance.

In December 2020, the SEC amended the Whistleblower Program and created the presumption that a meritorious award will automatically receive a maximum award of 30% of the monetary sanctions collected when:

1.  the amount collected in the covered action and related action(s), in the aggregate, would yield a maximum award of $5 million or less; and
2. there are no negative factors (culpability, unreasonable reporting delay, or interference with a company’s internal compliance system or process) and the claim does not trigger Rule 21F-16 (concerning culpable conduct).

However, the presumption may be set aside by the SEC if the Whistleblower’s assistance was limited or if “providing the enhancement would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the Whistleblower program.”  For example, if the Whistleblower engaged in securities law violations that were unrelated to the covered conduct resulting in the award, the SEC could in its discretion exclude the Whistleblower from receiving the statutory maximum award.

If the award amount is over $5 million, the SEC will consider the following factors in determining the amount of an award based on the facts and circumstances of each case:

• Factors that may increase the award percentage:
  • The significance of the information provided by the Whistleblower.
  • The extent of the assistance provided by the Whistleblower.
  • Law enforcement priority in deterring violations of a certain area of the securities laws.
  • The extent to which the Whistleblower participated in the company’s internal compliance systems.
• Factors that may reduce the award percentage:
  • The Whistleblower’s participation in, or culpability for, the securities law violations reported.
  • Unreasonable delay by the Whistleblower in reporting the violations to the SEC.
  • Whistleblower interference with the company’s internal compliance and reporting systems (i.e., making false statements that hindered the compliance department’s efforts to investigate possible wrongdoing).

The SEC’s reward determination is not appealable, so long as the total amount awarded is between 10% and 30% of the monetary recovery.  If the SEC denies the reward application, the Whistleblower may file an appeal in a United States Court of Appeals.

How Does a Whistleblower Know if their Tip led “to a successful SEC action”?

A Whistleblower’s tip may “lead to a successful SEC action” that will make the whistleblower eligible for an award if their tip causes the SEC to:

1. open a new investigation, re-open a previously closed investigation, or pursue a new line of inquiry in connection with an ongoing investigation; and
2. the SEC brings a successful enforcement action based at least in part on the tip provided.

The Whistleblower may be eligible for an award if the information provided to an ongoing investigation significantly contributes to the success of the SEC enforcement action.

How Does a Whistleblower Know to Apply for an Award?

The SEC posts Notices of Covered Action on the SEC Whistleblower Program website for all enforcement actions exceeding $1 million in sanctions.  All Whistleblowers who believe they voluntarily submitted original information used in a Covered Action may then apply for a Whistleblower Award in the action.  If SEC staff worked with the Whistleblower or their attorneys in the Covered Action, the SEC may notify the Whistleblower or their attorneys of the Notice of Covered Action posting as a matter of courtesy.  The responsibility to timely apply for an award before the deadline lies solely with the Whistleblower.

The SEC Whistleblower Program also provides an email update to enrollees when the Notices of Covered Action page is updated on the SEC Whistleblower Program website.  However, the SEC Whistleblower Program does not post information about “related actions” brought by other government agencies.

How Does a Whistleblower Apply for an Award in an Action?

To apply for an Award, a Whistleblower must timely complete and return Form WB-APP to the SEC’s Office of the Whistleblower by mail, email or fax within 90 days from issuance of the Notice of Covered Action.  A Whistleblower’s award application must explain in detail all factual issues in support of their award eligibility, including when the Whistleblower learned of the wrongful conduct, if there was a delay in reporting, and any involvement in the wrongful activity if applicable.

What Happens When Tips Are Used in Non-SEC Related Actions or Other Whistleblower Programs?

SEC Whistleblowers may also be eligible to receive an award for orders obtained by other authorities in actions that are related to a successful SEC action, known as “Related Actions,” if the Related Action is based on the same information provided by the Whistleblower in the SEC Covered Action.  For example, in August 2022, the largest single award issued by the SEC at the time consisted of $279 million from a covered SEC enforcement action and two “Related Actions” by another enforcement agency.

The SEC encourages Whistleblowers to submit their original information to multiple federal and state agencies or self-regulatory organizations, as applicable, to assist in the pursuit of all appropriate civil and criminal actions to remedy the wrongful conduct.  Some federal and state agencies have their own Whistleblower Programs, such as the CFTC Whistleblower Program, IRS Whistleblower Program, Anti-Money Laundering Whistleblower Program, Department of Justice Whistleblower Program, while others don’t (i.e., the FDIC).  Additionally, the SEC may confidentially share a Whistleblower’s tip with other appropriate federal and state agencies and authorities to further remedy the wrongful conduct.

The SEC Whistleblower Program incentivizes Whistleblowers to cooperate beyond the SEC by authorizing the SEC to pay additional awards for assistance provided in “Related Actions” of certain other agencies.

A “Related Action” under the SEC Whistleblower Program is a judicial or administrative action brought by either:

• The Attorney General of the United States;
• An appropriate regulatory authority (such as the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision);
• A state Attorney General in a criminal case; or
• A self-regulatory organization (SRO) (such as any national securities exchange, registered securities association, registered clearing agency, or the Municipal Securities Rulemaking Board).

An SEC award may be granted for a Related Action when one of the above organizations or authorities brings its own successful enforcement of the Related Action based on the same original information that the Whistleblower provided to the SEC that led to the SEC obtaining monetary sanctions totaling more than $1 million.  A Whistleblower cannot recover an award for a Related Action under the SEC Whistleblower Program without a successful SEC Covered Action based on the same original information.

Whether the SEC pays an additional award for a Related Action as part of the SEC award depends on whether the Related Action was brought by an  authority or agency with its own Whistleblower Program that provides monetary awards and the action’s connection to federal securities laws.

The SEC may provide an additional award for a Related Action, whether brought by a government agency with its own Whistleblower program (i.e., CFTC) or by another authority (i.e., SROs), if:

• The SEC finds that the maximum amount that the SEC could potentially pay on the non-SEC action does not exceed $5 million; or
• The SEC determines that the SEC Whistleblower Program has a more direct and relevant connection to the Related Action based on the nature, scope, and impact of the misconduct charged in the Related Action in relation to the Federal securities laws than the other Whistleblower Program.

Generally, the SEC will not consider an action by an authority with another comparable Whistleblower Program that provides monetary awards (i.e., IRS) to be an SEC awardable Related Action unless the SEC finds that the SEC Whistleblower Program has a more direct and relevant connection to the action and conduct governed by the securities law.  Without such a finding, the SEC Whistleblower may receive monetary awards for their original information from the SEC Whistleblower Program and the other applicable Whistleblower Programs separately.

If the Related Action is brought by an authority with a Whistleblower program that is not comparable to the SEC Whistleblower Program, then the SEC will treat the other Whistleblower action as an awardable Related Action regardless of the connection to the federal securities laws.  A Whistleblower program is considered not comparable to the SEC Whistleblower Program if its statutory award range is more limited, its awards are subject to an award cap, or it is discretionary and not mandatory.

The SEC Whistleblower will not be permitted to “double dip” on Related Action awards from the SEC Whistleblower Program and another comparable Whistleblower program for the same Related Action.  Similarly, if another Whistleblower program denied an award for a Related Action, the SEC Whistleblower will not be permitted to re-adjudicate any Related Action issues with the SEC that were resolved by the other Whistleblower program.

How Does a Whistleblower Apply for an Award for a Related Action?

If a final order imposing monetary sanctions has been entered in a Related Action when the Whistleblower submits their SEC award application, then the Whistleblower must also submit their claim for the Related Action award on Form WB-APP (Section E) used for the SEC Covered Action.  If the final order has not yet been entered in the Related Action, then the Whistleblower must submit another Form WB-APP within 90 days from the date of entry of the final order in the Related Action.

If the Whistleblower has applied for a Related Action award under another comparable Whistleblower program (i.e., CFTC, IRS or state Whistleblower program), then the Whistleblower should disclose that information on the Form WB-APP.  Whistleblowers are not permitted to double dip from the SEC and another Whistleblower program for the same Related Action.  The Whistleblower will be required to waive their Related Action claim submitted to the other Whistleblower program if they receive an award from the SEC for the same Related Action.

Can Whistleblowers Remain Anonymous Under the SEC Whistleblower Program?

By properly submitting their information through an experienced Whistleblower attorney, like those at Keller Grover, the Whistleblower need not disclose their identity to the SEC at all.  The Whistleblower’s attorney will submit the information to the SEC through the Form TCR by completing the required attorney certification.  The Whistleblower will maintain complete anonymity.  The attorney will interact with the SEC on the Whistleblower’s behalf.  The Whistleblower must provide the attorney a completed hard-copy Form TCR signed under penalty of perjury at the time of the anonymous submission attesting to the accuracy and truthfulness of the TCR the attorney is submitting on behalf of the anonymous Whistleblower.

Additionally, Dodd-Frank prohibits the SEC and its staff from disclosing any information that reasonably could be expected to reveal a Whistleblower’s identity.  For example, information that could reasonably be expected to reveal a Whistleblower’s identity is redacted from SEC orders granting or denying awards before they are issued publicly.  Protecting Whistleblower confidentiality is a cornerstone of the Program.  Without it, Whistleblowers would be less incentivized to come forward and report their information to the agency.

If a Whistleblower Reports Wrongdoing, Is There Any Protection Against Retaliation?

Under Dodd-Frank, employers may not discharge, demote, suspend, threaten, harass, or in any way discriminate in the terms and conditions of employment against an employee who has:

1. provided information of potential wrongdoing in violation of the federal securities laws under the SEC Whistleblower Program, or
2. initiated, testified in, or assisted in any SEC investigation or proceeding based on the Whistleblower’s information.

Dodd-Frank provides the Whistleblower a private right of action and authorizes the SEC to take enforcement actions against companies who retaliate against Whistleblowers.  However, Dodd-Frank’s anti-retaliation protections apply only to Whistleblowers who report to the SEC.

Whistleblowers who report possible securities law violations to the SEC in writing (TCR Form) and then are subjected to retaliation because of the report, may sue their employer in federal court and seek double back pay (with interest), reinstatement, reasonable attorneys’ fees, and reimbursement for certain costs in connection with the litigation.

Under Dodd-Frank Act Section 922, a SEC Whistleblower’s retaliation complaint may be filed within six (6) years after the date when facts material to the complaint are known or reasonably should have been known by the SEC Whistleblower, provided that no complaint may be filed over 10 years after the violation.

What If a Whistleblower Signs an Agreement that Contains Non-Disclosure Provisions?

Employees and outside contractors are often subject to Non-Disclosure Agreements (NDAs), which are commonly found in employment, severance, and settlement contracts.

However, since the passage of Dodd-Frank and enactment of the SEC Whistleblower Program, NDAs may not obstruct or interfere with a Whistleblower’s right to report potential securities violations to the SEC.

Under Dodd-Frank, the SEC enacted Rule 21F-17(a), which states: “No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement … with respect to such communications.”

The SEC has enforced this rule to hold companies accountable for contractual provisions that could even possibly impede a whistleblower from coming forward, including those provisions that arguably could impact whistleblower awards.

In practice, this means that NDAs cannot prohibit individuals from blowing the whistle on possible securities law violations to the SEC.

In enforcing Rule 21F-17(a), the SEC has found illegal language in:

• Severance or separation agreements
• Employee contracts
• Settlement agreements
• Compliance manuals

Language in the various types of contracts found to violate SEC Rule 21F-17(a) has included:

• Requiring the prior consent of the company before disclosing confidential information to regulators.
• Preventing the employee from initiating contact with regulators.
• Requiring the employee to waive their right to awards from whistleblowing award programs.
• Including a “non-disparagement clause” that specifically includes the SEC as a party to which the employee can not “disparage” the company.
• Requiring the employee to inform the company soon after reporting information to the SEC or of any SEC request for information.
• Requiring employees to sign agreements prohibiting disclosure of confidential corporate information to third parties without an exception for SEC whistleblowing.
• Requiring departing employees to affirm that they have not filed complaints with any government agency in order to receive deferred compensation.
• Including overly punitive and intimidating liquidated damage provisions in general confidentiality agreements to scare potential Whistleblowers from reporting.

Helpful SEC Whistleblower Program News and Articles

• How The SEC Regulates $29 Trillion in Equities

• The Success of The SEC Whistleblower Program

• The “Why” of SEC Whistleblower Awards: Analyzing the Rationale for Denials and Award Amounts in the SEC Whistleblower Program in 2024

• SEC and CFTC Whistleblower Programs Reveal Continued Success Combatting Fraud and Protecting Investors

• Securities and Exchange Commission Office of the Whistleblower Annual Report to Congress for Fiscal Year 2024

• Justice Department Announces Enforcement Action Charging Six Individuals For Cryptocurrency Fraud

From SEC Whistleblower Program Website