Qualifying for SEC Whistleblower Rewards

October 14, 2018

Who Qualifies For SEC Whistleblower Rewards?

In order to qualify for an SEC whistleblower award, you must voluntarily provide the SEC with original information that assists the SEC in bringing an enforcement action that results in sanctions of more than $1 million. Here are some of the more important requirements contained in the final rules of the SEC Whistleblower Program:

  • Your information must relate to a violation of U.S. securities laws or a bribe of a foreign official.
  • You must provide the information voluntarily—that is, before the government or a self-regulatory organization has asked you for the information.
  • The information must be based on your independent knowledge or independent analysis, and not certain public sources.
  • Your tip must cause the SEC to initiate a new investigation or contribute significantly to an ongoing investigation.
  • You may qualify for a reward if you report your concerns to the company internally, and the company then “self-reports” the information to the SEC.
  • The SEC might increase your reward if you first report your information through internal channels, but can reduce the reward if you impede the company’s internal investigation.

Who Does Not Qualify For SEC Whistleblower Rewards?

Unless they satisfy certain requirements, the following persons are noteligible for rewards:

  • Attorneys who obtain their information in connection with their representation of the company, or whose information is subject to attorney-client privilege;
  • Company officers or directors who learn about violations in connection with internal compliance processes;
  • Public accountants working on SEC-required engagements; and
  • Company employees who obtain their information in connection with their roles in audit or compliance functions.

Before concluding that you are not eligible for an award because you fall into one of these categories, you’ll need to determine whether you fit into the important exceptions outlined in SEC regulations. These exceptions are explained in detail in the SEC Whistleblower Practice Guide. If you believe you have information about securities violations or foreign bribes – or you have provided such information and were retaliated against as a result – contact the nationally recognized whistleblower attorneys at Katz Banks Kumin. Your communications with us are confidential, and without charge or further obligation.

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