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Whistleblower Protection Laws

2025-02-17T18:22:53Z

Admin: /* Prohibited Whistleblower Retaliation */

=='''Sarbanes-Oxley'''==

Section 806 of the '''Sarbanes-Oxley Act''' protects [https://www.zuckermanlaw.com/sp_faq/protected-whistleblower-protection-provision-sarbanes-oxley-act/ whistleblowers at covered employers] who report to their supervisor or the government conduct that they reasonably believe constitutes wire fraud, mail fraud, bank fraud, securities fraud, or a violation of any rule or regulation of the SEC, [https://www.zuckermanlaw.com/sp_faq/examples-sox-protected-activity-protected-whistleblowing/ or any provision of Federal law relating to fraud against shareholders.]

Some SOX whistleblowers have obtained substantial recoveries, including jury verdicts of [https://www.zuckermanlaw.com/jury-awards-former-bio-rad-counsel-8m-sarbanes-oxley-whistleblower-case/ $11M] and [https://www.zuckermanlaw.com/jury-awards-1-6m-to-sarbanes-oxley-whistleblower/ $5M] in [https://www.zuckermanlaw.com/whistleblower-law-videos/sox-whistleblower-protection-faqs/ SOX whistleblower retaliation cases.] Leading SOX whistleblower lawyer [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] has established favorable precedent construing SOX and has obtained more than ten settlements in SOX matters in excess of $1 million, two of which were above $4 million.

To succeed in a Sarbanes-Oxley retaliation claim, the whistleblower must show by a preponderance of the evidence that

#she had engaged in protected whistleblowing activity;
#the company was aware of her protected activity;
#she suffered an unfavorable personnel action; and
#her protected activity was a “contributing factor” in the unfavorable action.

[https://www.zuckermanlaw.com/clear-convincing-evidence-whistleblower-case/ “Contributing factor” causation ]is a light burden that can be met by showing that protected activities tended to affect in any way the decision to take the adverse action.

Once the whistleblower makes that showing, the company can avoid liability only by proving by [https://www.zuckermanlaw.com/sp_faq/employers-burden-sarbanes-oxley-whistleblower-retaliation-case/ clear and convincing evidence] that it would have taken the same adverse action even in the absence of the protected activity.

A helpful guide to SOX titled [https://www.zuckermanlaw.com/wp-content/uploads/2017/07/Sarbanes-Oxley-Whistleblower-Protection-Robust-Protection-for-Corporate-Whistleblowers.pdf Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers] elaborates on protections afforded whistleblowers under the law.

==='''Protected Whistleblowing Under the Sarbanes-Oxley Act'''===

The Sarbanes-Oxley whistleblower law protects corporate whistleblowers for providing information about securities fraud, shareholder fraud, bank fraud, a violation of any SEC rule or regulation, mail fraud, or wire fraud. The Department of Labor has construed SOX whistleblowing broadly, holding that:

*[ Disclosing a potential violation] is protected, i.e., an employee who reasonably believes that a securities violation is imminent will be protected by SOX if he or she reports the violation before it actually occurs.
*An [https://www.zuckermanlaw.com/sp_faq/types-proof-show-disclosure-objectively-reasonable/ employee’s mistaken belief in a violation of law can be objectively reasonable]. The reasonable person standard recognizes that many employees are unlikely to be trained to recognize legally actionable conduct by their employers. To satisfy the objective component of the “reasonable belief” standard, the employee must prove that a reasonable person in the same factual circumstances with the same training and experience would believe that the employer violated securities laws.
*To be [https://www.zuckermanlaw.com/sp_faq/sox-whistleblowers-required-show-disclosures-relate-definitively-specifically-federal-securities-law/ protected under SOX, the employee’s report need not “definitively and specifically”] relate to one of the listed categories of fraud or securities violations in Section 806 of SOX. The focus is “on the plaintiff’s state of mind rather than on the defendant’s conduct.” Guyden v. Aetna, Inc., 544 F.3d 376, 384 (2d Cir. 2008).

==='''Prohibited Whistleblower Retaliation Under Sarbanes-Oxley'''===

The [https://zuckermanlaw.com/wp-content/uploads/2020/06/ABA-2014-SOX-Update11.pdf whistleblower protection provision of the Sarbanes-Oxley Act] prohibits a broad range of retaliatory adverse employment actions, including discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower. Recently a federal court of appeals held that merely outing or disclosing the identity of a whistleblower is actionable retaliation under SOX.

==='''Proving Sarbanes-Oxley Whistleblower Retaliation '''===

To prevail under SOX’s whistleblower provision, an employee must prove by a preponderance of the evidence that

*they engaged in protected activity;
*the employer knew that they engaged in the protected activity;
*they suffered an unfavorable personnel action; and
*the protected activity was a contributing factor in the unfavorable action.

A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision. Causation can be inferred from timing alone where an adverse employment action follows on the heels of protected activity. The decision-maker’s knowledge of the protected activity and close temporal proximity will suffice to prove causation in some cases.

Once the employee proves the elements of a Sarbanes-Oxley whistleblower retaliation claim by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same unfavorable personnel action in the absence of the complainant’s protected behavior or conduct.

==='''Recent SOX Whistleblower Recoveries'''===

There is no cap on special damages under SOX, and some state whistleblower protection laws enable whistleblowers to recover punitive damages. Recently '''[ccountants-whistleblowers/ corporate whistleblowers have obtained substantial recoveries]''' in SOX whistleblower cases:

*[https://www.zuckermanlaw.com/jury-awards-former-bio-rad-counsel-8m-sarbanes-oxley-whistleblower-case/ Jury Awards Former Bio-Rad Counsel $11M]in Sarbanes-Oxley Whistleblower Case
*[https://www.zuckermanlaw.com/jury-awards-million-dollars-whistleblower-sarbanes-oxley-case/ Jury Awards Six Million Dollars to Whistleblower] in Sarbanes-Oxley Case
*Sarbanes-Oxley Whistleblower [https://www.zuckermanlaw.com/jury-awards-1-6m-to-sarbanes-oxley-whistleblower/ Recovers Nearly $5 Million]
*[https://www.zuckermanlaw.com/jp-morgan-sox-whistleblower-wins-1-13m-trial/ JP Morgan SOX Whistleblower Wins $1.13M at Trial]
*[https://www.zuckermanlaw.com/ubs-whistleblower-prevails-trial-sox-whistleblower-case/ UBS Whistleblower Prevails at Trial] in SOX Whistleblower Case

==='''Remedies in Whistleblower Retaliation Cases'''===

Whistleblower retaliation can exact a serious toll, including lost pay and benefits, reputational harm, and emotional distress. Indeed, whistleblower retaliation can derail a career and deprive the whistleblower of millions of dollars in lost future earnings.

Whistleblowers should be rewarded for doing the right thing, but all too often they suffer retaliation and find themselves marginalized and ostracized. Federal and state whistleblower laws provide several remedies to compensate whistleblowers that have suffered retaliation, including:

*back pay (lost wages and benefits);
*emotional distress damages;
*damages for reputational harm;
*reinstatement or front pay in lieu thereof;
*lost future earnings; and
*punitive damages.

Click [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/whistleblower-verdicts-and-settlements/ here] for examples of substantial verdicts and settlements in whistleblower retaliation cases. Recently, the Pennsylvania Supreme Court affirmed an award of approximately $3.2 million in a whistleblower protection case.

===='''Back Pay in Whistleblower Retaliation Cases'''====

Back pay is compensation for lost wages and benefits that the whistleblower would have earned absent the adverse employment action, offset by interim earnings. A back pay award may include all promotions and salary increases the complainant would have received in the absence of retaliation. See, e.g., Welch v. Cardinal Bankshares Corp., 2003-SOX-15, at 17 (ALJ Feb. 15, 2005) (holding that a prevailing complainant “is entitled to all promotions and salary increases that he would have obtained but for the illegal discharge”) rev’d on other grounds, 536 F.3d 269 (4th Cir. 2008). The value of stock options is recoverable in SOX whistleblower cases. Hagman v. Washington Mutual Bank, Inc., 2005-SOX-73, 2006 WL 6105301, *32 (Dec. 19, 2006).

In addition to back pay, a prevailing whistleblower is entitled to prejudgment interest under certain whistleblower protection laws. Prejudgment interest accrues from the time of the whistleblower’s termination to the time that the court entered judgment.

Under the False Claims Act whistleblower protection law and Dodd-Frank anti-retaliation provision, a prevailing whistleblower is entitled to recover double back pay. In Mooney v. Americare, the court held that back pay is doubled before the court offsets the value of interim earnings (also known as mitigation).

Back pay can also include contracted severance pay to which he would be entitled in the event of discharge without cause when reinstatement was not appropriate. See Loftus v. Horizon Lines, Inc., ARB No. 16-082, ALJ No. 2014-SPA-004 (ARB May 24, 2018).

===='''Front Pay in Lieu of Reinstatement in Whistleblower Retaliation Cases'''====

Reinstatement is the “presumptive and preferred remedy,” but where pronounced animosity between the parties leads both of them to advocate against reinstatement, front pay may be an appropriate substitute. Front pay is designed to compensate the plaintiff for the time it would take to secure comparable employment. See, e.g., Hagman v. Washington Mutual Bank, Inc., ALJ Case No. 2005-SOX-00073, at 26–30 (ARB Dec. 19, 2006), appeal dismissed, ARB Case No. 07-039 (ARB May 23, 2007) (awarding $640,000 in front pay to a banker whose supervisor became verbally and physically threatening when the banker disclosed concerns about the short funding of construction loans).

Where a whistleblower demonstrates that he planned to continue working for the employer until he or she reached normal retirement age and demonstrates sufficient efforts to mitigate damages (find comparable employment), the whistleblower can been entitled to expected earnings to the date of retirement. For example in the Perez v. Progenics Pharmaceuticals SOX whistleblower case, the court awarded approximately $2.7 in front pay. That case is discussed in an article in Corporate Counsel titled How to Help a Whistleblower.

Front pay is an appropriate remedy in lieu of reinstatement in SOX whistleblower cases. See Jones v. SouthPeak Interactive Corp., 986 F. Supp. 2d 680 (E.D. Va. 2013), aff’d, 777 F.3d 658 (4th Cir. 2015). Andrea Jones worked at SouthPeak Interactive Corp. (“SouthPeak”) as its chief financial officer, and SouthPeak terminated her employment two days after she disclosed accounting irregularities to the SEC. Following a four-day trial, a jury found for Jones and awarded nearly $700,000 in damages. Jones then filed a motion seeking front pay in lieu of reinstatement and in addition to compensatory damages. Judge Payne awarded front pay, and noted the following:

Front pay also has been more precisely defined as “a lump sum … representing the discounted present value of the difference between the earnings [an employee] would have received in his old employment and the earnings he can be expected to receive in his present and future, and by hypothesis, inferior, employment.” McKnight v. Gen. Motors Corp., 908 F.2d 104, 116 (7th Cir.1990), cert. denied, 499 U.S. 919, 111 S.Ct. 1306, 113 L.Ed.2d 241 (1991), partially superseded by Civil Rights Act of 1991, Pub.L. 102-166, 105 Stat. 1071 (codified at 42 U.S.C. 1981 et seq.). If a plaintiff has been diverted onto a less profitable career path through the unlawful actions of his former employer, an award of front pay to compensate the plaintiff until such time as he can regain his former career track is not a windfall.

SouthPeak appealed Judge Payne’s decision. The DOL filed an amicus curiae brief arguing that front pay is an appropriate remedy under SOX, and the Fourth Circuit affirmed. See 777 F.3d at 663.

In calculating front pay, courts should apply the following guiding principles:

*“It is well settled that `the risk of lack of certainty with respect to projections of lost income must be borne by the wrongdoer, not the victim.” Bartek v. Urban Redevelop ent Authority, 882 F.2d 739, 746 (3d Cir. 1989).
*The Court should “assume, absent evidence to the contrary, that the illegally discharged employee would have continued working for the employer until he or she reached normal retirement age.” See Perez v. Progenics Pharmaceuticals, Inc., 204 F. Supp. 3d 528 (S.D.N.Y. 2016).

===='''Compensatory Damages in Whistleblower Retaliation Cases'''====

The SOX whistleblower protection law and similar corporate whistleblower protection laws authorize the award of not only economic damages, but also “special damages” which includes damages for emotional distress, mental anguish, humiliation and injury to reputation. See, e.g., Lockheed Martin Corp. v. Admin. Rev. Bd., 717 F.3d 1121, 1138 (10th Cir. 2013) (upholding an award of “noneconomic compensatory damages” for “emotional pain and suffering, mental anguish, and humiliation”). As a federal judge held in Hanna v. WCI Communities, Inc., 348 F.Supp.2d 1332 (S.D.Fla.2004), a SOX whistleblower case, “[w]hen reputational injury caused by an employer’s unlawful discrimination diminishes a plaintiff’s future earnings capacity, [he] cannot be made whole without compensation for the lost future earnings [he] would have received absent the employer’s unlawful activity.”

“[A] plaintiff’s testimony, standing alone, can support an award of compensatory damages, [but] the evidence of the emotional distress must be demonstrable, genuine, and adequately explained.” Price v. City of Charlotte, N.C., 93 F.3d 1241, 1251-52 (4th Cir. 1996). The whistleblower’s testimony “must indicate with specificity how the plaintiff’s alleged distress manifested itself.” Bryant v. Aiken Reg’l Med. Ctrs., 333 F.3d 536, 547 (4th Cir. 2003) (internal quotation marks and alterations omitted).

===='''Attorney Fees and Litigation Costs in Whistleblower Retaliation Cases'''====

Legal fees and costs in whistleblower retaliation cases can also be significant. In the Wadler v. Bio Rad SOX whistleblower retaliation case, Bio-Rad stipulated to $3M in attorney fees for the whistleblower’s counsel. In March 2020, Magistrate Judge Michael E. Hegarty awarded $2,719,225.50 in lodestar fees on the whistleblower’s recovery of $620,105.00 in an NDAA whistleblower retaliation case. See Cejka v. Vectrus Systems Corp., 2019 WL 8198090 (D. Colo. Feb. 21, 2019).

==='''Litigating Sarbanes-Oxley Whistleblower Cases'''===

A Sarbanes-Oxley whistleblower retaliation complaint must be filed initially with OSHA. The complainant has the option to remove a SOX whistleblower claim to federal court once the complaint has been pending at the Department of Labor for 180 days.

===='''180-Day Sarbanes-Oxley Statute of Limitations'''====

The deadline for a SOX whistleblower to file a complaint is 180 days after the whistleblower first experiences or becomes aware of the unlawful retaliation.i The clock starts ticking once “the discriminatory decision has been both made and communicated to the complainant.”ii

The 180-day clock starts to run on the date of each discrete retaliatory act, e.g., the date on which the whistleblower is informed of a demotion, suspension, termination, change in job duties, etc. However, in an action alleging a hostile work environment, retaliatory acts outside the statute of limitations period are actionable where there is an ongoing hostile work environment and at least one of the acts occurred within the 180-day statute of limitations.

A SOX retaliation complaint is considered filed once the Department of Labor receives it. A complaint sent by mail, however, is considered filed on the date of its postmark.

The 180 day period is not jurisdictional and may be equitably tolled when (1) the respondent actively misled the complainant respecting the cause of action, (2) extraordinary circumstances prevented the complainant from asserting his rights, (3) complainant raised the precise statutory claim in issue but mistakenly did so in the wrong forum, or (4) the respondent did not actively mislead the complainant, but instead through its acts or omissions lulled the complainant into foregoing prompt action to vindicate his rights.

“[A]lthough recovery for any action outside the 180-day period is barred, an employee may still use ‘the prior acts as background evidence in support of a timely claim.’” Roop v. Kan. City S. Ry., No. CIV-16-413-SPS, 2017 U.S. Dist. LEXIS 177646 (E.D. Okla. Oct. 26, 2017) citing Dunn v. BNSF Ry. Co., 2017 U.S. Dist. LEXIS 137109, 2017 WL 3670559, at *8 (W.D. Wash. Aug. 25, 2017), quoting Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 105, 110, 113 (2002).

===='''Individual Liability Under SOX Whistleblower Protection Law'''====

A whistleblower can bring a SOX retaliation claim against individuals who have the functional ability to retaliate against the whistleblower, and are aware of the whistleblower’s protected conduct (or influenced by a person with knowledge of the protected conduct).

The Fourth Circuit and a California district court have held that directors may be held individually liable under SOX as agents of a publicly-traded company. See Jones v. Southpeak Interactive Corp. of Delaware, 777 F.3d 658, 675 (4th Cir.2015); Wadler v. Bio-Rad Labs, Inc., No. 15-cv-02356-JCS, 2015 WL 6438670 (N.D. Cal. Oct. 23, 2015). But in Zornoa v. Terraform Global, Inc. of the United States Court for the Southern District of New York held that corporate directors are not liable under SOX because they are not understood to function as agents and the statute omits directors from its list of potentially liable persons.

===='''OSHA Enforcement of Sarbanes-Oxley Whistleblower Law'''====

The U.S. Department of Labor Occupational Safety and Health Administration (“OSHA”) administers the anti-retaliation provision of SOX. A SOX whistleblower claim must be filed initially with OSHA. OSHA will then investigate the complaint and may order preliminary reinstatement of the whistleblowers if it finds “reasonable cause” to believe that retaliation occurred.

OSHA finds “reasonable cause” when it determines that a reasonable judge could rule for the whistleblower. And a reasonable judge could rule so only where there is evidence supporting each element of a SOX retaliation claim. Generally, though, less evidence is required to establish “reasonable cause” at this stage than to prevail at trial. “OSHA’s responsibility to determine whether there is reasonable cause to believe a violation occurred is greater than the complainant’s initial burden to demonstrate a prima facie allegation that is enough to trigger the investigation.”[i] But OSHA need not “resolve all possible conflicts in the evidence or make conclusive credibility determinations to find reasonable cause to believe that a violation occurred.” In practice, however, OSHA rules for SOX complainants only in the strongest cases, which is due in part to the burden that OSHA must bear to order preliminary reinstatement of a whistleblower.

[i] [https://www.whistleblowers.gov/memo/2015-04-20 Clarification of the Investigative Standard for OSHA Whistleblower Investigations (Apr. 20, 2015)]

=='''Dodd-Frank Act'''==

The whistleblower protection provision of the Dodd-Frank Act prohibits retaliation against a whistleblower for lawful actions taken by a whistleblower:

#in providing information to the Commission in accordance with this section;
#in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or
#in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. [§§] 7201 et seq.), this chapter, including section 78j-1(m) of this title, section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of the Commission.

15 U.S.C. § 78u-6(h)(1)(A). A prevailing whistleblower can secure reinstatement and recover double back pay and compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.

In February 2018, the Supreme Court held in Somers that the anti-retaliation provision of the Dodd-Frank Act projects a whistleblower only where the whistleblower has disclosed a potential securities law violation to the SEC. Somers also clarified that once an employee has provided information to the SEC, subsequent internal disclosures are protected absent proof that the employer had knowledge of the disclosure to the SEC.

Post Somers, the SEC has indicated that it will continue to prioritize whistleblower protection as a key tool to encourage whistleblowers to come forward. In a June 28, 2018 public statement at the open meeting announcing the Proposed Rulemaking, Chair Clayton stated: “Many have asked whether the SEC will continue to enforce the anti-retaliation provisions of Dodd-Frank. Let me be clear: retaliation protections are a key component of the whistleblower program, and we will bring charges against companies or individuals who violate the anti-retaliation protections when appropriate.” Statement at Open Meeting on Amendments to the Commission’s Whistleblower Program Rules.

==='''SEC Enforcement of Dodd-Frank SEC Whistleblower Retaliation Provision'''===

The SEC has taken enforcement action for retaliation against a whistleblower.

*On September 29, 2016, the SEC ordered International Game Technology (“IGT”) to pay a $500,000 penalty for terminating the employment of a whistleblower because he reported to senior management and to the SEC that the company’s financial statements might be distorted. See Exchange Act Release No. 78991 (Sept. 29, 2016). During an internal investigation into the whistleblower’s allegations, IGT removed him from opportunities that were integral to his ability to perform his job successfully. IGT then fired the whistleblower the same day as the internal investigation concluded that IGT’s cost-accounting model was appropriate and did not cause its financial statements to be distorted. The whistleblower was protected under the SEC whistleblower program, despite being mistaken, because he reasonably believed that IGT’s cost-accounting model constituted a violation of federal securities laws.

The action against IGT was the SEC’s first standalone retaliation case. However, it is consistent with a 2014 enforcement action that indicated, for the first time, that retaliating against a whistleblower can result not only in a private suit brought by the whistleblower but also in a unilateral SEC enforcement action.

*On June 16, 2014, the SEC announced that it was taking enforcement action against Paradigm Capital Management, Inc. (“Paradigm”), a hedge fund advisory firm, for engaging in prohibited principal transactions and for retaliating against the whistleblower who disclosed the unlawful trading activity to the SEC. See Exchange Act Release No. 72393 (June 16, 2014). This was the first case in which the SEC exercised its authority under Dodd-Frank to bring enforcement actions based on retaliation against whistleblowers.
*According to the order, Paradigm retaliated against its head trader for disclosing, internally and to the SEC, prohibited principal transactions with an affiliated broker-dealer while trading on behalf of a hedge fund client. The transactions were a tax-avoidance strategy under which realized losses were used to offset the hedge fund’s realized gains.
*When Paradigm learned that the head trader had disclosed the unlawful principal transactions to the SEC, it retaliated against him by removing him from his position as head trader, changing his job duties, placing him on administrative leave, and permitting him to return from administrative leave only in a compliance capacity, not as head trader. The whistleblower ultimately resigned his position.
*Paradigm settled the SEC charges by consenting to the entry of an order finding that it violated the anti-retaliation provision of Dodd-Frank and committed other securities law violations; agreeing to pay more than $1 million to shareholders and to hire a compliance consultant to overhaul their internal procedures; and entering into a cease-and-desist order.

The SEC’s press release accompanying the order includes the following statement by Enforcement Director Andrew Ceresney: “Those who might consider punishing whistleblowers should realize that such retaliation, in any form, is unacceptable.” '''The Paradigm enforcement action suggests that whistleblower retaliation can result in liability far beyond the damages that a whistleblower can obtain in a retaliation action and that retaliation can invite or heighten SEC scrutiny.'''

=='''Differences between SOX and Dodd-Frank Acts '''==

This table identifies some of the major differences between the anti-retaliation provisions of SOX and Dodd-Frank. To maximize the potential recovery, a whistleblower could initially bring a SOX claim at OSHA and subsequently remove it to federal court and also bring a Dodd-Frank claim. Doing so could enable the whistleblower to recover double back pay and uncapped special damages.

{| class="wikitable"
|-
! Topic Area !! SOX !! Dodd-Frank
|-
| Scope of Coverage || Any company with a class of securities registered under section 12 of the Securities Exchange Act of 1934, or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934, including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company, or nationally recognized statistical rating organization, or any officer, employee, contractor, subcontractor, or agent of such company. || Any employer
|-
| Protection for internal whistleblowing || Yes || Internal whistleblowing protected only if individual has also reported a possible securities violation to the SEC
|-
| Protection for whistleblowing to SEC || Yes || Yes
|-
| Statute of Limitations || 180 days || 6 years
|-
| Administrative Exhaustion || Must file initially with OSHA || None
|-
| Arbitration || Exempt from mandatory arbitration || Not exempt
|-
| Back pay || Ordinary back pay || Double back pay
|-
| Special damages for emotional distress and reputational harm || Available || Not available
|}

=='''Four advantages to bringing a SOX claim in addition to a Dodd-Frank claim:'''==

*Uncapped special damages: The Dodd-Frank Act authorizes economic damages and equitable relief but does not authorize non-economic damages. In contrast, SOX authorizes uncapped “special damages” for emotional distress and reputational harm.
*Exemption from mandatory arbitration: SOX provides an unequivocal exemption from mandatory arbitration, but Dodd-Frank claims are subject to arbitration.
*Preliminary reinstatement: If an OSHA investigation concludes that an employer violated the whistleblower protection provision of SOX, OSHA can order the employer to reinstate the whistleblower.
*Favorable causation standard: A far more generous burden of proof (“contributing factor” causation under SOX, rather than “but for” causation under Dodd-Frank).

=='''Four advantages to bringing a Dodd-Frank claim in addition to a SOX claim:'''==

*Double back pay: Dodd-Frank authorizes an award of double back pay (double lost wages) plus interest, whereas SOX authorizes ordinary back pay with interest along with other damages. Both statutes authorize reinstatement and attorney fees.
*Longer statute of limitations: Whereas the statute of limitations for a SOX retaliation claim is just 180 days, the statute of limitations for a Dodd-Frank retaliation claim is six to ten years.
*Broader scope of coverage: SOX whistleblower protection applies primarily to employees of public companies and contractors of public companies. The Dodd-Frank prohibition against whistleblower retaliation applies to “any employer,” not just public companies.
*No administrative exhaustion: In contrast to SOX, Dodd-Frank permits a whistleblower to sue a current or former employer directly in federal district court without first exhausting administrative remedies at DOL.

=='''Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers'''==

At-will employees that suffer retaliation for participating in a federal court proceeding can bring claims under 42 U.S.C. § 1985(2). This civil rights statute prohibits conspiracies to intimidate or retaliate against parties, witnesses or jurors testifying or participating in federal court proceedings. Under 42 U.S.C. § 1985(2), a victim of intimidation or retaliation who suffers injury to “his person or property” can recover damages against the perpetrators of the conspiracy. The Supreme Court held in Haddle v. Garrison, 525 U.S. 121 (1998) that a conspiracy to terminate an employee’s at-will employment constitutes injury to person or property and is therefore actionable under 42 U.S.C. § 1985(2).

=='''RICO Prohibition Against SEC Whistleblower Retaliation'''==

Section 1107 of SOX, 18 U.S.C. § 1513(e), criminalizes whistleblower retaliation. It provides:

*Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title, imprisoned not more than 10 years, or both.

As Section 1513(e) is a predicate offense under the '''Racketeer Influenced and Corrupt Organizations Act''' (RICO), there is a private right of action to remedy a violation of 1513(e). Protected conduct includes reporting a possible criminal securities law violation to the SEC. RICO is a potent remedy because it authorizes treble damages. 18 U.S.C. § 1964(c).

In DeGuelle v. Camilli, 664 F.3d 192 (7th Cir. 2011), DeGuelle, a tax employee of S.C. Johnson & Son, Inc. (“SCJ”), was terminated after reporting an alleged tax scheme to his employer and federal agencies.

*Over an eight year period beginning in 2001, DeGuelle relayed a series of concerns regarding SCJ tax practices to Daniel Wenzel, Global Tax Counsel of SCJ. Wenzel directed DeGuelle to alter or destroy documents to avoid detection of a tax issue that DeGuelle brought to Wenzel also instructed DeGuelle and another employee to fabricate a business transaction in order to exploit accounting rules for the company’s benefit. DeGuelle finally met with Camilli, Director of Human Resources, to discuss that Wenzel was creating a hostile work environment. DeGuelle also spoke with Gayle Kosterman who informed DeGuelle that the company hired a law firm to investigate his tax fraud allegations and DeGuelle spoke with attorneys from the firm.
*Wenzel told DeGuelle to keep his complaints about the tax department within the department, instead of taking them to human resources. Wenzel made disparaging comments towards DeGuelle in front of other employees and acted aggressively towards him. DeGuelle received a negative performance review, which was conducted off-cycle and at odds with the award he received earlier that year recognizing his stellar performance.
*On September 10, 2008, DeGuelle and Camilli met again to discuss DeGuelle’s safety concerns relating to Wenzel’s behavior. Later that month, DeGuelle and Wenzel had another verbal altercation and DeGuelle received a negative review from Wenzel. DeGuelle spoke with Camilli alleging that the negative review was in retaliation for his whistleblowing, which she said she would investigate.
*In November, DeGuelle contacted Camilli in writing to inform her that if the company did not take action, he would contact state or federal authorities regarding the retaliation.
*On December 18, 2008 DeGuelle was informed that the negative review was retaliatory and would be revoked. DeGuelle was directed to drop his tax fraud complaints, but DeGuelle said he would file a whistleblower complaint with the Department of Labor. The company offered a salary increase and offered to pay part of his attorney fees if he signed a confidentiality agreement and release of claims.
*Instead, on December 18, 2008, DeGuelle filed a complaint under SOX with the Department of Labor, attaching tax documents, financial statements and internal communications to his complaint.
*In January 2009, DeGuelle met with Kosterman to withdraw his salary request, fearing that it could be viewed as an attempt to profit from the company’s tax fraud.
*On February 17, 2009, the DOL determined that SCJ was not a covered entity under SOX. Id. at 197.
*On March 10, 2009 SCJ sent another fraudulent tax return to the IRS.
*On March 19, 2009 DeGuelle sent a memorandum detailing his concerns to SCJ counsel, after which Kosterman offered him a year’s salary if he were to resign and signed a confidentiality agreement and released all claims.
*On April 9, 2009, SCJ began investigating DeGuelle for disclosing confidential company documents. DeGuelle met with Camilli and other investigators and denied disclosing documents, but admitted that he attached them to the DOL complaint, asserting that Camilli was aware of those disclosures.
*After that meeting, Kosterman and another employee placed DeGuelle on administrative leave, ultimately terminating him for taking and disclosing confidential business documents. SCJ filed suit in Racine County Circuit court seeking recovery of SCJ property and confidential information and for breach of contract and conversion. Following the suit, SCJ made defamatory statements about DeGuelle in the media.
*DeGuelle then filed suit in federal court alleging multiple claims, including RICO violations. Id. at 198.
*The district court dismissed the RICO claims, holding that the tax fraud and retaliation are unrelated offenses and thus do not form a pattern of racketeering activity. The district court also reasoned that since by the time the retaliation occurred, the government was already aware of alleged tax fraud, the predicate offenses were not the proximate cause of DeGuelle’s injuries.
*The Seventh Circuit Court of Appeals reversed, holding that “[r]etaliatory acts are inherently connected to the underlying wrongdoing exposed by the whistleblower… Accordingly, we believe a relationship can exist between § 1513(e) predicate acts and predicate acts involving the underlying cause for such retaliation.” Id at 201. The court determined that despite SCJ officials’ attempts to investigate DeGuelle’s concerns and protect him from retaliation, SCJ can still be held liable for retaliatory termination. The court also noted that a whistleblower does not have to show that the same officials participated in both the crime and the retaliation.

Following DeGuelle, in Simkus v. United Airlines, No. 11 C 2165, 2012 WL 3133603, (N.D. Ill. July 31, 2012), Simkus brought a suit against United Airlines under RICO.

*Simkus alleged two predicate acts in his civil RICO suit that occurred within a ten year period, mail and wire fraud related to United providing Simkus with incorrect information regarding his stock allocation in 2006 and retaliation against Simkus in violation of SOX for reporting asbestos violations to the Occupational Health and Safety Administration (OSHA). The court found that these two acts failed the “continuity plus relationship” test.
*Unlike the alleged tax fraud and retaliation committed by SCJ, there was no relationship between the two acts alleged by Simkus. Id. at *3-4.

The Seventh Circuit’s holding in DeGuelle illustrates how a whistleblower who has been retaliated against can bring a RICO action against an employer relying upon Section 1107 as a predicate offense.

[1] This case was ultimately dismissed on remand and again on appeal, due to collateral estoppel relating to the judgement in the state court case filed by SCJ, in which DeGuelle represented himself pro se, failing to include affidavits in his response to SCJ’s motion for summary judgment. See DeGuelle v. Camlli 724 F. 3d 9ss (7th Cir. August 1, 2013).

=='''Breach of Contract Claim'''==

An employer’s breach of an anti-retaliation policy in a Code of Ethics can potentially give rise to a breach of contract claim, although the law varies by state.

For example, in 2015, a federal district court held that an employer’s anti-retaliation policy created legally enforceable rights. See Leyden v. Am. Accreditation Healthcare Comm’n, 83 F. Supp. 3d 241, 247–48 (D.D.C. 2015). In Leyden, the trial court held that the plaintiff had a valid claim based on the employer’s alleged violation of its internal anti-retaliation policy. The court relied on law construing whether employee handbooks created implied contractual rights.

*In Leyden, the plaintiff was the Chief Accreditation Officer at the American Accreditation Healthcare Commission, a nonprofit offering accreditation and certification programs to healthcare entities. The defendant had an anti-retaliation policy, which stated: “No URAC employee who in good faith reports any Improper Activities in accordance with this policy shall suffer, and shall be protected from threats of harassment, retaliation, discharge, or other types of discrimination.” The plaintiff voiced concerns that new management was mistreating female executives and that two board members were engaged in conduct that she thought jeopardized the organization’s independence. The defendant then terminated the plaintiff’s employment.
*The defendant moved to dismiss the complaint, arguing in relevant part that the anti-retaliation policy did not create contractual rights. Even if it did, the defendant contended, it had disclaimed any such rights in its employee handbook.
*However, the court held that the anti-retaliation policy created an implied contract. The court began by reviewing Strass v. Kaiser Foundation Health Plan, a case holding that an employee handbook created an implied contract. Id. at 247 (citing Strass v. Kaiser Found. Health Plan, 744 A.2d 1000 (D.C. 2000)). The court discussed how a manual could create rights, and how an employer could effectively disclaim those rights. The court also rejected the defendant’s argument about the disclaimer, noting that a disclaimer that was “rationally at odds” with the other language in the document may not cut off an implied contract.

In finding an implied contract, the court focused on the employer’s invitation to report “Improper Activities” internally and on the language of the anti-retaliation policy. The court also concluded that the employer’s disclaimer, which was found in a different document, was rationally at odds with the anti-retaliation policy. The reasoning in Leyden may be persuasive in other jurisdictions and provide an important remedy to whistleblowers that are not covered under federal or state whistleblower protection statutes.

=='''Defense Contractor Whistleblower Protection Act'''==

In an article titled “New law drove whistleblower complaints against DOD contractors up,” Jill Aitoro reports that the NDAA whistleblower protection provisions, which became effective one year ago, have generated a substantial increase in whistleblower complaints to the Department of Defense Office of Inspector General. According to the article, “the rate of complaints from Defense Department whistleblowers increased from about four to six a month as of August 2013 to more than 200 since Jan. 1.” In addition, the article reports that whistleblower disclosures about DOD contractor fraud have resulted in several substantial recoveries for the government.

Sections 827 and 828 of the NDAA provide robust whistleblower protection to employees of most government contractors and grantees. Under the NDAA whistleblower protection provisions, protected conduct includes the disclosure of information that the employee reasonably believes is evidence of:

*gross mismanagement of a Federal contract or grant;
*a gross waste of Federal funds;
*an abuse of authority relating to a Federal contract or grant; or
*a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract.

To be protected, the disclosure must be made to a Member of Congress or Congressional committee, an IG, the GAO, a federal employee responsible for contract or grant oversight or management at the relevant agency, an authorized official of DOJ or other law enforcement agency, a court or grand jury or a management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.

=='''Differences Between False Claims Act Whistleblower Protection and NDAA/Defense Contractor Whistleblower Protection'''==

Whistleblowers disclosing DoD contractor fraud can pursue claims both under the FCA and the NDAA. The following table summarizes key distinctions between Section 3730(h) of the False Claims Act and Sections 827 and 828 of the NDAA:

{| class="wikitable"
|-
! Topic Area !! False Claims Act Whistleblower Protection !! NDAA/Defense Contractor Whistleblower Protection Act
|-
| Coverage || Employee, contractor, or agent of federal contractor || Employee of a contractor, subcontractor, grantee, or subgrantee, or a personal services contractor
|-
| Scope of Protected Conduct (protected whistleblowing) || Protects lawful acts done by the employee, contractor, agent, or associated others (1) in furtherance of an action under the FCA or (2) other efforts to stop 1 or more violations || Protects disclosures to employer or the government concerning:
* Violation of law, rule, or regulation related to a federal contract
* Gross mismanagement of a federal contract or grant
* Gross waste of federal funds
* Abuse of authority relating to a federal contract or grant
* Substantial and specific danger to public health or safety
|-
| Damages || Double back pay, reinstatement, uncapped special damages (emotional distress and harm to reputation), attorney’s fees || Back pay, reinstatement, uncapped special damages, attorney’s fees
|-
| Causation Standard || "But for" causation || Contributing factor causation
|-
| Administrative Exhaustion || No exhaustion requirement; file directly in federal court || Must file initially at OIG and after 210 days, can remove claim to federal court
|-
| Statute of Limitations || 3 years || 3 years
|}

=='''Defense Contractor Whistleblower: Reporting Fraud Internally or Directly to the Government'''==

There are many factors to consider in deciding whether to blow the whistle directly to the government in the form of a qui tam whistleblower lawsuit and which laws offer the best remedy to combat retaliation. It is important to assess your options at an early stage to avoid waiving claims or rights. For example, entering into a global release or global waiver with your employer to resolve a retaliation claim could waive your right to recover a qui tam whistleblower award.

=='''Proving NDAA Whistleblower Retaliation'''==

The burden of proof and causation standard in NDAA whistleblower cases is very favorable to employees. The complainant prevails merely by demonstrating that the protected disclosure was a contributing factor in the personnel action, which can be met by showing knowledge and temporal proximity.

=='''Remedies for Prevailing NDAA Whistleblowers'''==

Remedies for prevailing whistleblowers in NDAA retaliation actions include reinstatement, back pay, uncapped compensatory damages (emotional distress damages) and attorney fees and costs.

==''Procedures for Filing an NDAA Whistleblower Retaliation Claim''==

An NDAA retaliation claim must be filed initially with the Office of Inspector of General of the agency that awarded the contract or grant about which the employee disclosed wrongdoing, and the statute of limitations is three years after the date of the reprisal. The OIG will investigate the complaint and make recommendations to the agency head. If the agency head fails to provide requested relief within 210 days, the whistleblower may bring an action in federal district court and try the case before a jury.

=='''Taxpayer First Act'''==

Yes, the Taxpayer First Act (TFA) protects tax whistleblowers against retaliation, including whistleblowers that have provided information to the IRS through the IRS whistleblower reward program.

The purpose of the TFA IRS whistleblower protection law is to encourage whistleblowers with high-value inside information about tax noncompliance to come forward.

See this helpful article in Accounting Today: Whistleblower protections for accountants and tax professionals bolstered by new law.

Section 1405(b) of the TFA prohibits any “employer, officer, employee, contractor, subcontractor, or agent” of an employer from retaliating against a whistleblower.

=='''Protected Whistleblowing Under the Taxpayer First Act'''==

The TFA protects a broad range of disclosures about potential violations of IRS rules or tax fraud. It protects not only disclosures to the IRS, but also internal disclosures, including an employee’s disclosure to a supervisor or “any other person working for the employer who has the authority to investigate, discover, or terminate misconduct.” In particular, protected conduct includes:

*any lawful act done by the employee– (A) to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of the Treasury, the Treasury Inspector General for Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or
*(B) to testify, participate in, or otherwise assist in any administrative or judicial action taken by the Internal Revenue Service relating to an alleged underpayment of tax or any violation of the internal revenue laws or any provision of Federal law relating to tax fraud.

TFA whistleblower protection is not limited to disclosures of actual tax fraud. Instead, DOL and federal court precedent construing similar whistleblower protection laws protect a whistleblower’s reasonable but mistaken belief that the conduct complained of constituted a violation of relevant law. The whistleblower, however, must demonstrate that they had an objectively reasonable belief, which is assessed based on the knowledge available to a reasonable person in the circumstances with the employee’s training and experience.

=='''Prohibited Retaliation Against Tax Fraud Whistleblowers'''==

The TFA prohibits a wide range of retaliatory personnel actions, including discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower in the terms and conditions of employment.

The catch-all category of retaliation (“in any other manner” discriminating against a whistleblower) includes non-tangible employment actions, such as “outing” a whistleblower in a manner that forces the whistleblower to suffer alienation and isolation from work colleagues. See Menendez v. Halliburton, Inc., ARB Nos. 09-002, -003, ALJ No. 2007- SOX- 5 (ARB Sept 13, 2011). An employment action can constitute actionable retaliation if it “would deter a reasonable employee from engaging in protected activity.” Id. at 20.

=='''Burden of Proof in a TFA Whistleblower Retaliation Case'''==

Section 1405(b) of the TFA applies the causation standard and burden-shifting framework set forth in the AIR21 Whistleblower Protection Law. Under that framework, the whistleblower prevails by proving that their protected whistleblowing was a contributing factor in the unfavorable personnel action taken by their employer.

The DOL ARB has emphasized that the standard is low and “broad and forgiving”; protected activity need only play some role, and even an “[in]significant” or “[in]substantial” role suffices. Palmer v. Canadian Nat’l R.R., ARB No. 16-035, ALJ No. 2014-FRS-154, at 53 (ARB Sept. 30, 2016)(emphasis in original). Examples of circumstantial evidence that can establish “contributing factor” causation include:

*temporal proximity;
*the falsity of an employer’s explanation for the adverse action taken;
*inconsistent application of an employer’s policies;
*an employer’s shifting explanations for its actions;
*animus or antagonism toward the whistleblower’s protected activity; and
*a change in the employer’s attitude toward the whistleblower after they engage in protected activity.

Once the whistleblower proves that their protected conduct was a contributing factor in the adverse action, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the whistleblower engaging in protected conduct.

=='''Remedies in a Tax Fraud Whistleblower Retaliation Case'''==

A prevailing TFA whistleblower is entitled to make-whole relief, which includes:

*reinstatement;
*double back pay with interest;
*uncapped “special damages,” which courts have construed as encompassing damages for emotional distress and reputational harm; and
*attorney fees, litigation costs, and expert witness fees.

These remedies are substantially similar to the relief authorized in the anti-retaliation provision of the False Claims Act. Neither statute authorizes an award of punitive damages, but double back pay and uncapped special damages can be a potent remedy.

=='''Deadline or Statute of Limitations to File a TFA Whistleblower Retaliation Case'''==

The statute of limitations for a TFA whistleblower retaliation claim is 180 days from the date that the employee is first informed of the adverse action.

=='''Tax Fraud Whistleblower Retaliation Case Adjudication'''==

The claim must be filed initially with OSHA, which will investigate the claim. If OSHA determines that there is reasonable cause to believe that a violation occurred, OSHA can order relief, including reinstatement of the whistleblower.

Either party can appeal OSHA’s determination by requesting a de novo hearing before the DOL Office of Administrative Law Judge (OALJ), but an employer’s objection to an order of preliminary relief will not stay the order of reinstatement. Once a TFA retaliation claim has been pending before the DOL for more than 180 days, the whistleblower can remove the claim to federal court and try the case before a jury.

=='''Employer Mandatory Arbitration of Employment Disputes'''==

TFA retaliation claims are exempt from mandatory arbitration.

=='''Awards for Reporting Tax Fraud to the IRS'''==

Under 26 USC § 7623(b), the IRS is required to issue an award to tax whistleblowers of 15% to 30% of proceeds collected from tax fraud or tax underpayments if:

*the whistleblower provides a tip that the IRS decides to take action on (a whistleblower cannot force the IRS to act on a tip);
*the amount in dispute (the tax underpayment, including interest and penalties) exceeds $2 million (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
*the IRS collects tax underpayments resulting from the action (including any related actions).

During fiscal year 2018, the IRS awarded $312M to tax fraud whistleblowers, and whistleblowers enabled the IRS to recover $1,441,255,859.

=='''Taxpayer First Act Whistleblower Protection Law'''==

26 U.S.C. § 7623(d)

CIVIL ACTION TO PROTECT AGAINST RETALIATION CASES

(1) ANTI-RETALIATION WHISTLEBLOWER PROTECTION FOR EMPLOYEES. No employer, or any officer, employee, contractor, subcontractor, or agent of such employer, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment (including through an act in the ordinary course of such employee’s duties) in reprisal for any lawful act done by the employee—

(A) to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of the Treasury, the Treasury Inspector General for Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or

(B) to testify, participate in, or otherwise assist in any administrative or judicial action taken by the Internal Revenue Service relating to an alleged underpayment of tax or any violation of the internal revenue laws or any provision of Federal law relating to tax fraud.

(2) ENFORCEMENT ACTION.

(A) IN GENERAL. A person who alleges discharge or other reprisal by any person in violation of paragraph (1) may seek relief under paragraph (3) by

(i) filing a complaint with the Secretary of Labor, or

(ii) if the Secretary of Labor has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.

(B) PROCEDURE. —

(i) IN GENERAL. An action under subparagraph (A)(i) shall be governed under the rules and procedures set forth in section 42121(b) of title 49, United States Code.

(ii) EXCEPTION. Notification made under section 42121(b)(1) of title 49, United States Code, shall be made to the person named in the complaint and to the employer.

(iii) BURDENS OF PROOF. An action brought under subparagraph (A)(ii) shall be governed by the legal burdens of proof set forth in section 42121(b) of title 49, United States Code, except that in applying such section—

(I) ‘behavior described in paragraph (1)’ shall be substituted for ‘behavior described in paragraphs (1) through (4) of subsection (a)’ each place it appears in paragraph (2)(B) thereof, and ”(II) ‘a violation of paragraph (1)’ shall be substituted for ‘a violation of subsection (a)’ each place it appears.

(iv) STATUTE OF LIMITATIONS. A complaint under subparagraph (A)(i) hall be filed not later than 180 days after the date on which the violation occurs.

(v) JURY TRIAL. A party to an action brought under subparagraph (A)(ii) shall be entitled to trial by jury.

(3) REMEDIES.—

(A) IN GENERAL. An employee prevailing in any action under paragraph (2)(A) shall be entitled to all relief necessary to make the employee whole.

(B)COMPENSATORY DAMAGES.—Relief for any action under subparagraph (A) shall include—

(i) reinstatement with the same seniority status that the employee would have had, but for the reprisal,

(ii) the sum of 200 percent of the amount of back pay and 100 percent of all lost benefits, with interest, and

(iii) compensation for any special damages sustained as a result of the reprisal, including litigation costs, expert witness fees, and reasonable attorney fees.

(4) RIGHTS RETAINED BY EMPLOYEE. Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law, or under any collective bargaining agreement.

(5) NONENFORCEABILITY OF CERTAIN PROVISIONS WAIVING RIGHTS AND REMEDIES OR REQUIRING ARBITRATION OF DISPUTES.

(A) WAIVER OF RIGHTS AND REMEDIES. The rights and remedies provided for in this subsection may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement.

(B) PREDISPUTE ARBITRATION AGREEMENTS. No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this subsection.

=='''Whistleblower Protection Act'''==

The Whistleblower Protection Act protects federal employees, including Veterans Affairs whistleblowers, against retaliation for making any disclosure that a federal employee reasonably believes evidences:

*a violation of any law, rule, or regulation;
*gross mismanagement;
*a gross waste of funds;
*an abuse of authority;
*a substantial and specific danger to public health or safety; or
*censorship related to research, analysis, or technical information that cause, or will cause, gross government waste or mismanagement, an abuse of authority, a substantial and specific danger to public health or safety, or any violation of law.

The Whistleblower Protection Enhancement Act of 2012 clarifies that a disclosure does not lose protection where:

*the disclosure was made to a person, including a supervisor, who participated in the wrongdoing disclosed;
*the disclosure revealed information that had previously been disclosed;
*of the employee or applicant’s motive for making the disclosure;
*the disclosure was made while the employee was off duty;
*of the amount of time which has passed since the occurrence of the events described in the disclosure; or
*the disclosure was made during the employee’s normal course of duties, providing the employee is able to show that the personnel action was taken in reprisal for the disclosure.

=='''Prohibited Forms of Whistleblower Retaliation (Personnel Actions)'''==

The WPA prohibits the taking of a broad range of personnel actions in retaliation for whistleblowing, including removals, demotions, reassignments, pay decisions, as well as significant changes in duties, responsibilities, or working conditions. In addition, the Whistleblower Protection Enhancement Act prohibits an agency from implementing or enforcing any nondisclosure policy, form, or agreement that fails to notify an employee that the agreement does not supersede, conflict with, or otherwise alter whistleblower rights and protections.

=='''Proving Whistleblower Retaliation Under the Whistleblower Protection Act'''==

The burden of proof under the Whistleblower Protection Act is very favorable to whistleblowers. An employee can prevail by showing that protected whistleblowing was a contributing factor in the personnel action. The agency can avoid liability only if proves by clear and convincing evidence that it would have taken the same personnel action in the absence of the employee’s protected whistleblowing.

To determine whether an agency has met its burden via clear and convincing evidence, judges evaluate:

*the strength of the agency’s evidence in support of its personnel action;
*the existence and strength of any motive to retaliate on the part of the agency officials who were involved in the decision; and
*any evidence that the agency takes similar actions against similarly situated employees who are not whistleblowers.

=='''Damages or Relief for Federal Employee Whistleblowers'''==

A prevailing whistleblower can recover lost wages, attorney’s fees, equitable relief (e.g., reinstatement, rescinding a suspension, modifying a performance evaluation, etc.) and uncapped compensatory damages (emotional distress damages). In addition, a whistleblower can recover fees, costs, or damages reasonably incurred due to a retaliatory investigation. Retaliatory investigations can take many forms, such as unwarranted referrals for criminal or civil investigations or extraordinary reviews of time and attendance records.

=='''Filing a Whistleblower Protection Act Complaint'''==

Whistleblower retaliation is a prohibited personnel practice under the Civil Service Reform Act. A complaint alleging a prohibited personnel practice can be filed at the U.S. Office of Special Counsel. If you have suffered retaliation for protected whistleblowing that is also appealable to the Merit System Protection Board, you may elect to pursue a remedy through one of three remedial processes:

*an appeal to the Board under 5 U.S.C. § 7701;
*a grievance under a collective bargaining agreement; or
*a complaint filed with OSC, which can be followed by an Individual Right of Action appeal filed with the Board.

This election of remedies does not affect the right to pursue an EEO complaint, i.e., an employee can pursue both an EEO complaint and an OSC complaint simultaneously.

=='''Energy Reorganization Act'''==

Section 211 of the Energy Reorganization Act (ERA) protects employees who disclose concerns about nuclear safety or a violation a Nuclear Regulatory Commission (NRC) rule or regulation.

=='''Protected Nuclear Safety Whistleblowing'''==

The ERA whistleblower anti-retaliation provision protects employees in the nuclear industry for engaging in protected whistleblowing, including:

*Raising concerns about nuclear safety;
*Refusing to engage in activities prohibited under either the ERA or AEA provided the employee has identified the alleged illegality;
*Testifying before Congress or at any Federal or State proceeding regarding any provision of the ERA or the AEA;
*Commencing or causing to be commenced a proceeding under or the enforcement of the ERA or AEA, or testifying in any such proceeding; or
*Assisting or participating in any other action to promote nuclear safety.

The ERA protects disclosures to an employer and disclosures to the NRC. Click here to report a safety or security concern directly to the NRC.

=='''Prohibited Retaliation Against Nuclear Safety Whistleblowers'''==

Section 211 of the ERA prohibits a broad range of retaliatory actions, including termination, harassment, suspension, demotion, blacklisting/refusal to hire, and any act that would dissuade a reasonable person from engaging further protected activity.

Recently, OSHA awarded $260,000 to a nuclear whistleblower who was wrongfully terminated after reporting safety concerns concerning a construction project at the Wolf Creek Generating Station, including breaches of minimum soil coverage requirements for emergency service water piping.

=='''Proving ERA Whistleblower Retaliation'''==

To prevail on an ERA whistleblower complaint, a complainant must prove by a preponderance of the evidence that the complainant’s protected whistleblowing was a contributing factor in the adverse action. A common source of indirect evidence of retaliation is “temporal proximity” between the protected whistleblowing and the adverse action. The closer the temporal proximity, the greater the causal connection there is to the alleged retaliation.

If the complainant’s protected activity was a contributing factor in the adverse action, the employer may avoid liability only if it demonstrates by clear and convincing evidence that it would have taken the same unfavorable personnel action in the absence of the protected whistleblowing. This is known as the “same decision defense.” To assess whether an employer has proven that defense by clear and convincing evidence, DOL evaluates the following factors:

*whether the employer’s evidence meets the plain meaning of “clear” and “convincing”;
*whether the employer’s evidence indicates subjectively that the employer “would have” taken the same adverse action; and
*whether facts that the employer relies on would change in the “absence of” the protected activity.”

=='''Remedies for Prevailing Nuclear Safety Whistleblowers'''==

A prevailing nuclear whistleblower can obtain:

*Reinstatement,
*Lost wages,
*Damages for emotional distress and anguish, humiliation, harm to reputation, and other non-economic harms, and
*Attorney’s fees.

In Hobby v. Georgia Power Co., the Administrative Review Board affirmed an award of $250,000 in compensatory damages for emotional distress, humiliation, and loss of reputation.

=='''Filing an ERA Whistleblower Retaliation Complaint'''==

An ERA whistleblowing complaint must be filed initially with the Occupational Safety and Health Administration (OSHA) within 180 days of when the whistleblower knew or should have known of the retaliatory adverse action.

=='''Licensee Duty to Maintain Safety Conscious Work Environment'''==

The NRC has published guidance for licensees emphasizing the importance of maintaining safety-conscious environments in which employees feel free to raise safety concerns, both to their management and to the NRC, without fear of retaliation. In particular, the NRC has articulated the following expectations:

*Employers licensed by the NRC must have processes in place for employees to report safety concerns;
*Subcontractors have the same responsibilities as licensed entities;
*Senior management must involve themselves to the extent necessary to ensure all safety concerns are addressed; and
*Employees have a responsibility to raise safety concerns with their employer, and a right to bring concerns to the NRC if the employer fails to address them.

=='''Wendell H. Ford Aviation Investment and Reform Act for the 21st Century'''==

The AIR21 whistleblower law protects employees in the airline industry against retaliation for raising a concern about air carrier safety. '''==Proving a Violation of AIR21 Whistleblower Protection Law=='''

To prevail under AIR21, the whistleblower must prove:

*the employee engaged in protected whistleblowing;
*the employer was aware of the protected whistleblowing;
*the employer took an adverse action; and
*the protected whistleblowing was a contributing factor in the employer’s decision to take the adverse action.

A contributing factor is any factor which, alone or in combination with other factors, tends to affect in any way the outcome of the decision. Circumstantial evidence may include a wide variety of evidence, such as motive, bias, work pressures, past and current relationships of the involved parties, animus, temporal proximity, pretext, shifting explanations, and material changes in employer practices, among other types of evidence.

Once the complainant has proven these four elements, the employer may avoid liability only if it demonstrates by clear and convincing evidence that it would have taken the same adverse personnel action in the absence of the whistleblowing.

AIR21 protects an employee of a section 44704 or 44705 FAA certificate holder or a contractor, subcontractor, or supplier of such holder.

=='''Protected Air Safety Whistleblowing'''==

As amended by the Aircraft Certification, Safety, and Accountability Act, AIR21 protects whistleblowers against retaliation for:

*Disclosing a potential violation of any FAA order, regulation, or standard to an employer or the federal government;
*Commencing a proceeding related to a potential violation of an airline safety regulation; or
*Testifying, assisting, or participating in a proceeding related to a potential violation of an airline safety regulation.

Examples of protected disclosures include:

*reporting a violation of the airline’s flight operations manual;
*disclosing that an aircraft is not in airworthy condition;
*identifying falsified FAI documentation (a violation of 14 C.F.R. §21.2(a));
*opposing a violation of 14 C.F.R. § 135.267(c), which limits pilots that conduct Part 135 operations from working more than 14 hours of duty time;
*reporting conduct that would result in “operating an aircraft in a careless or reckless manner so as to endanger the life or property of another”;
*reporting the use of an unsuitable part (a violation of 14 C.F.R. §3.5(c)(2)); and
*reporting that a pilot failed a line check, i.e., which triggers a requirement upon the carrier not to utilize the pilot until the pilot passes the line check.

FAA regulations on airplane safety can be found [https://www.faa.gov/regulations_policies/faa_regulations/ here.]

“As a matter law, an employee engages in protected activity any time [h]e provides or attempts to provide information related to a violation or alleged violation of an FAA requirement or any federal law related to air carrier safety, where the employee’s belief of a violation is subjectively and objectively reasonable.” Sewade v. Halo- Flight, Inc., ARB No. 13-098, slip op. at 7-8 (Feb. 13, 2015). The “complainant must prove that he reasonably believed in the existence of a violation,” which entails both a subjective and an objective component. Burdette v. ExpressJet Airlines, Inc., ARB No. 14-059, slip op. at 5 (Jan. 21, 2016).

The complainant need not prove an actual violation of a regulation, order, or standard relating to air carrier safety, as long as the complainant’s belief in a violation is reasonable. Furland v. Am. Airlines, Inc., ARB No. 90-102, ALJ No. 2008-AIR-011, slip op. at 5 (ARB July 27, 2011). Also, the complainant need not convey his reasonable belief in order for it to be protected. See Newell v. Airgas, Inc., ARB No. 16-007, ALJ No. 2015-STA-6, slip op. at 11 (ARB Jan. 10, 2018).

=='''Prohibited Whistleblower Retaliation Under AIR21 Whistleblower Law'''==

AIR21 prohibits a broad range of retaliatory acts that have a negative effect on the employee’s terms, conditions, or privileges of employment. This includes intimidating, threatening, restraining, coercing, blacklisting, or discharging a whistleblower.

An adverse employment action is one that would dissuade a reasonable worker from engaging in protected whistleblowing.

*Suspension without pay is a way to dissuade employees from engaging in AIR21 protected conduct, and is therefore an adverse employment action.
*Subjecting an employee to a 15D psychological evaluation can be an actionable adverse action where it is selectively implemented or utilized in a retaliatory fashion.

The DOL ARB has held “that the intended protection of AIR 21 extends beyond any limitations in Title VII and can extend beyond tangibility and ultimate employment actions.” Williams v. American Airlines, ARB No. 09- 018, slip op. at 10-11 n.51 (Dec. 29, 2010)). The ARB views “the list of prohibited activities in Section 1979.102(b) as quite broad and intended to include, as a matter law, reprimands (written or verbal), as well as counseling sessions by an air carrier, contractor or subcontractor, which are coupled with a reference of potential discipline.” Williams, ARB No. 09-018 at 10-11. For example, “even paid administrative leave may be considered an adverse action under certain circumstances.” Id. at 14 (emphasis in original) (citing Van Der Meer v. Western Ky. Univ., ARB No. 97-078, slip op. at 4-5 (Apr. 20, 1998) (holding that “although an associate professor was paid throughout his involuntary leave of absence, he was subjected to adverse employment action by his removal from campus)).

=='''Remedies for Airline Industry Workers in AIR21 Whistleblower Protection Cases'''==

Under AIR-21, a prevailing whistleblower can recover:

*Reinstatement;
*Lost wages and benefits;
*Compensatory damages for emotional distress and reputational harm; and
*Attorney fees and litigation costs.

A mechanic who was fired for reporting insufficient maintenance on ambulance helicopters was awarded $485,000 in damages, plus attorney’s fees.

An airline that filed a retaliatory defamation lawsuit against nine whistleblowers was ordered to withdraw its lawsuit and pay $7.9 million in damages to the employees.

In a decision finding that Delta violated the anti-retaliation provision of the AIR21 whistleblower protection law, Judge Morris awarded pilot Karlene Petit $500,000 in compensatory damages for emotional distress, humiliation, and reputational harm.

In Vieques Air Link, Inc. v. USDOL, No. 05-01278 (1st Cir. Feb. 2, 2006), the First Circuit affirmed a compensatory damages award of $50,000 for mental anguish where the complainant testified that he depleted his savings and struggled to support his wife and two infant children while he looked for a new full-time job following his termination.

=='''How to File an AIR21 Aviation Safety Whistleblower Retaliation Claim'''==

An AIR-21 whistleblowing retaliation complaint must be filed initially with the Occupational Safety and Health Administration (OSHA) within 90 days of when the whistleblower knew or should have known of the retaliatory adverse action.

In 2015, the FAA and OSHA entered into a Memorandum of Understanding to facilitate cooperation concerning enforcement of the whistleblower protection provisions in AIR21. The DOL and FAA both play a critical role in enforcing the whistleblower protection provision of AIR21. The FAA investigates complaints related to air carrier safety and enforces air safety regulations and issue sanctions to airmen and air carriers for noncompliance with these regulations.

=='''Surface Transportation Assistance Act'''==

The whistleblower protection provision of the Surface Transportation Assistance Act (“STAA”) protects truck drivers from retaliation where they engage in protected whistleblowing, which includes:

*Refusing to operate a vehicle because: (i) The operation violates a regulation, standard, or order of the United States related to commercial motor vehicle safety, health, or security; or (ii) He or she has a reasonable apprehension of serious injury to himself or herself or the public because of the vehicle’s hazardous safety or security condition;
*Accurately reporting hours on duty; or
*Cooperating with a safety or security investigation by the Secretary of Transportation, the Secretary of Homeland Security, or the National Transportation Safety Board; or
*Furnishing information to the Secretary of Transportation, the Secretary of Homeland Security, the National Transportation Safety Board, or any Federal, State, or local regulatory or law enforcement agency as to the facts relating to any accident or incident resulting in injury or death to an individual or damage to property occurring in connection with commercial motor vehicle transportation.

In two recent cases, truck drivers prevailed where they were terminated for refusing to drive a damaged truck and refusing to drive while on prescription medication.

=='''Proving a Trucking Safety Whistleblower Protection Claim'''==

A trucking whistleblower must prove the following to prevail in a STAA whistleblower retaliation claim:

*The employee engaged in protected conduct;
*The employer was aware of the protected whistleblowing;
*The employer took an adverse action; and
*The protected whistleblower was a contributing factor in the employer’s decision to take the adverse action.

=='''Prohibited STAA Whistleblower Retaliation'''==

STAA proscribes a wide range of retaliatory adverse actions, including discharging, disciplining or discriminating against a whistleblowing employee regarding pay, terms or privileges of employment. Examples include blacklisting, termination, suspension, demotion, reduction in salary, failure to hire, or any act that would deter a reasonable person from engaging in protected activity.

=='''Remedies Available to Prevailing Trucking Industry Whistleblowers'''==

A prevailing trucking industry whistleblower can recover:

*Reinstatement,
*Lost wages and benefits,
*Damages for emotional distress and anguish, humiliation, harm to reputation, and other *non-economic harms,
*Attorney fees and litigation costs, and
*Punitive damages up to $250,000.

Recently, a truck driver was awarded $150,000 after he was fired for refusing to drive in unsafe weather conditions.

In Fink v. R&L Transfer, Inc., the ARB affirmed an award of compensatory damages in the amount of $100,000.00, and punitive damages in the amount of $50,000 to a truck driver who was terminated for refusing to drive in unsafe winter weather conditions.

=='''How to File a Trucking Safety Whistleblower Retaliation Action'''==

A STAA whistleblowing complaint must be filed initially with the Occupational Safety and Health Administration (OSHA) within 180 days of when the whistleblower knew or should have known of the retaliatory action.

=='''Consumer Financial Protection Act'''==

The anti-retaliation provision of the Consumer Financial Protection Act provides a cause of action for corporate whistleblowers who suffer retaliation for raising concerns about potential violations of rules or regulations of the Consumer Financial Protection Bureau.

OSHA has issued final rules implementing the whistleblower protection provision of the Consumer Financial Protection Act (CFPA). Enacted as Section 1057 of the Dodd-Frank Act, the CFPA’s whistleblower protection provision provides robust protection to employees who disclose fraud related to consumer financial protection services.

The whistleblower protection provisions of the Sarbanes-Oxley Act also provides strong protection for whistleblowers. Click here to download a helpful guide to the Sarbanes-Oxley whistleblower protection law.

=='''Banking Industry Employees Protected by the Consumer Financial Protection Whistleblower Law'''==

The term “covered employee” means “any individual performing tasks related to the offering or provision of a consumer financial product or service.” The CFPA defines a “consumer financial product or service” to include “a wide variety of financial products or services offered or provided for use by consumers primarily for personal, family, or household purposes, and certain financial products or services that are delivered, offered, or provided in connection with a consumer financial product or service . . . Examples of these include . .. residential mortgage origination, lending, brokerage and servicing, and related products and services such as mortgage loan modification and foreclosure relief; student loans; payday loans; and other financial services such as debt collection, credit reporting, credit cards and related activities, money transmitting, check cashing and related activities, prepaid cards, and debt relief services.”

Recently the Fifth Circuit Court of Appeals held in Calderone v. Sonic Houston JLR, L.P that the CFPA does not protect employees of auto dealers.

=='''Scope of Protected Whistleblowing About Consumer Financial Protection Violations'''==

The CFPA protects disclosures made to an employer, to the Consumer Financial Protection Bureau or any State, local, or Federal, government authority or law enforcement agency concerning any act or omission that the employee reasonably believes to be a violation of any CFPB regulation or any other consumer financial protection law that the Bureau enforces. This includes several federal laws regulating “unfair, deceptive, or abusive practices . . . related to the provision of consumer financial products or services.”

Some of the matters the CFPB regulates include:

*kickbacks paid to mortgage issuers or insurers;
*deceptive advertising;
*discriminatory lending practices, including a violation of the Equal Credit Opportunity Act (“ECOA”);
*excessive fees;
*any false, deceptive, or misleading representation or means in connection with the collection of any debt; and
*debt collection activities that violate the Fair Debt Collection Practices Act (FDCPA).

The ECOA prohibits creditors from discriminating against “any applicant, with respect to any aspect of a credit transaction—on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract).” 15 U.S.C. § 1691(a)(1).

CFPA protected conduct includes disclosures concerning:

*'''Loan fraud'''' – Where the plaintiff banker reported a fellow banker for preparing a loan for disbursement without providing the borrower three days to rescind their decision to borrow as required by state and federal consumer protection statutes, the District Court for the Southern District of West Virginia held this could be protected activity. Vaghela v. Huntington Bancshares, Inc., 2018 WL 2014087 (S.D. W.Va. Apr. 30, 2018).
*'''Mortgage overbilling''' – Where the plaintiff mortgage attorney reported what he believed to be a widespread practice of significant overbilling of mortgage loans by a mortgage foreclosure firm, the District Court for the District of Maryland held that this could be protected. Yoder v. O’Neil Group, LLC, 2017 WL 6206074 (D. Md. Dec. 8, 2017).
*'''Banking fraud''' – Where former bank employees alleged termination for reporting fraudulent sales practices that they alleged were violations of the Truth in Lending Act, the Home Ownership Equity Protection Act, and the Real Estate and Settlement Procedures Act, the District Court for the Northern District of Illinois held reporting violations of any of these statutes would be protected activity and retaliatory termination for objecting to these violations would violate the CFPA. Lysik v. Citibank, N.A., 2017 WL 4164037 (N.D. Ill. Sep. 20, 2017).
*'''Lapses in bank management and judgment''' – Where a bank’s treasurer and chief financial officer uncovered and reported serious mismanagement of a bank and its funds, including the bank’s president using the business credit card for personal expenses and engaging in pattern of unusual check cashing by cashing checks by placing holds on employee accounts, the District Court for the District of Massachusetts held this could constitute protected activity. Becotte v. Cooperative Bank, 2017 WL 886967 (D. Mass. Mar. 6, 2017).

While the CFPB’s whistleblower protections are relatively broad, simply asking questions about alleged violations of banking laws will generally not constitute protected conduct. The Sixth Circuit Court of Appeals has held that where a mortgage loan originator had a conversation with his employer bank’s mortgage compliance department about the obligation to mail out adverse action notices informing mortgage loan applicants that they had been denied loans and liability for failure to do so, he did not engage in protected activity. The court held the plaintiff-employee did not engage in protected activity because he did not object to the unlawful practice and instead only asked questions confirming and clarification what he should do in the future. The court, in its decision, implied that if the mortgage loan originator had instead objected to unlawful activity rather than only asking questions, his activity would have been protected under the CFPA, and his employer may have violated the statute by terminating his employment. See Veard v. F&M Bank, 704 Fed. Appx. 469 (6th Cir. 2017).

=='''Reasonable Belief Standard in Banking Whistleblower Retaliation Cases'''==

The CFPA whistleblower protection law employs a reasonable belief standard. As long as the plaintiff’s belief is reasonable, the whistleblower is protected, even if the whistleblower makes a mistake of law or fact about the underlying violation of a law or regulation under the CFPB’s jurisdiction.

=='''Prohibited Whistleblower Retaliation Against Financial Services/Banking Industry Employees'''==

The CFPA whistleblower law proscribes a broad range of adverse employment actions, including terminating, “intimidating, threatening, restraining, coercing, blacklisting or disciplining, any covered employee or any authorized representative of covered employees” because of the employee’s protected whistleblowing.

=='''Proving CFPA Whistleblower Retaliation'''==

To prevail under a CFPA whistleblower claim, the whistleblower need only prove that his or her protected conduct was a contributing factor in the adverse employment action, i.e., that the protected activity, alone or in combination with other factors, affected in some way the outcome of the employer’s decision. Where the employer takes the adverse employment action “shortly after” learning about the protected activity, courts may infer a causal connection between the two. Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1001 (9th Cir. 2009).

=='''Filing a CFPA Financial Whistleblower Retaliation Claim'''==

CFPA complaints are filed with OSHA, and the statute of limitations is 180 days from the date when the alleged violation occurs, which is the date on which the retaliatory decision has been both made and communicated to the whistleblower.

The complaint need not be in any particular form and can be filed orally with OSHA. A CFPA complaint need not meet the stringent pleading requirements that apply in federal court, and instead the administrative complaint “simply alerts OSHA to the existence of the alleged retaliation and the complainant’s desire that OSHA investigate the complaint.” If the complaint alleges each element of a CFPA whistleblower retaliation claim and the employer does not show by clear and convincing that it would have taken the same action in the absence of the alleged protected activity, OSHA will conduct an investigation.

OSHA investigates CFPA complaints to determine whether there is reasonable cause to believe that protected activity was a contributing factor in the alleged adverse action. If OSHA finds a violation, it can order reinstatement of the whistleblower and other relief.

=='''Federal Railroad Safety Act'''==

The [https://www.law.cornell.edu/uscode/text/49/20109 Federal Railroad Safety Act] prohibits rail carriers from retaliating and discriminating against employees who, inter alia, reported violations of federal railroad safety laws or refused to work under hazardous conditions.

Congress enacted the FRSA whistleblower protection law to promote safety in every area of railroad operations and reduce railroad-related accidents and incidents. The FRSA whistleblower protection law is intended to address and rectify railroads’ history of systematically suppressing employee injury reports through retaliatory harassment and intimidation. See Araujo v. N.J. Transit Rail Operations, Inc., 708 F.3d 152, 156–57 & n.3, 159 & n.6 (3d Cir. 2013) Congress intended to “ensure that employees can report their concerns without the fear of possible retaliation or discrimination from employers.” H.R. Rep. 110-259, 248.”

Click [https://www.zuckermanlaw.com/whistleblower-recovers-250000-punitive-damages/ here] to read about a case in which an FRSA whistleblower [https://www.zuckermanlaw.com/whistleblower-recovers-250000-punitive-damages/ recovered $250,000 in punitive damages]

=='''Railroad Industry Protected Whistleblowing'''==

The FRSA prohibits retaliation against a railroad employee who provides information to a regulatory or law enforcement agency, a member of Congress, or any person with supervisory authority over the employee about a reasonably perceived violation of federal law relating to railroad safety or security, or the abuse of public funds appropriated for railroad safety. In addition, the FRSA protects an employee who:

*refuses to violate a federal law, rule or regulation related to railroad safety or security;
*files a complaint under FRSA;
*notifies or attempts to notify the railroad carrier or Department of Transportation of a work-related personal injury or illness of an employee;
*cooperates with safety or security investigations conducted by the DOT, Department of Homeland Security, or National Transportation Safety Board;
*furnishes information to the DOT, DHS, NTSB, or any federal, state or local law enforcement agency regarding an accident resulting in death or injury to a person in connection with railroad transportation; or
*accurately reports hours on duty.

Under the FRSA’s good-faith report requirement, any report made in good faith is protected activity; whether the medical cause of an injury is ultimately work-related is immaterial. Koziara v. BNSF Railway Co., No. 13-cv-834-jdp, 2015 WL 137272, at *6-7 (W.D. Wis. Jan. 9, 2015); Davis v. Union Pacific Railroad Co., No. 5:12-CV-2738, 2014 WL 3499228, at *6-7 (W.D. La. July 14, 2014).

Examples of FRSA protected whistleblowing include:

*Refusing to perform a roll-by inspection from the ground, where the complainant reasonably believed the inspection would violate Canadian National Railroad Operating Rule 523, which requires: “When duties and terrain permit, at least two crew members of a standing train . . . must inspect passing trains on the ground on both sides of the track. At locations where trains will meet, the train to arrive second must notify the first train when they pass the approach to the siding, to allow crew members to be in position for inspection.”

=='''Scope of Prohibited Retaliation/Adverse Actions'''==

The FRSA prohibits a wide range of retaliatory actions, including discharging, demoting, suspending, reprimanding, or in any other way discriminating against a whistleblower. As Judge Gee recently held in Herbert Rothschild v. BNSF Railway Co., 2017-FRS-0003 (Jan. 2, 2019): The list of prohibited activities is “quite broad” and includes reprimands or counseling sessions “which are coupled with a reference to potential discipline.” Williams v. American Airlines, ARB No. 09-00018, ALJ No. 2007-AIR-00004, slip op. at 10-11(ARB Dec. 29, 2010). . .[A] notice of investigation [can be actionable retaliation] because it does more than refer to “potential” discipline: it notifies the employee that disciplinary processes have been initiated against him. Even if the investigation were ultimately to be canceled, the employee would be aware that his employer was in the process of mustering evidence and witnesses against him, and that he faced a very real risk of discipline. . . . the notice of investigation is the first step in a disciplinary process that can lead to discipline and loss of income, and is part of a progressive discipline policy where successive violations lead to more serious consequences, potentially including termination. . . A written warning is presumptively adverse, including where it implicitly or explicitly references potential discipline. Williams v. American Airlines, ARB No. 09-00018, at 11.

However, being called a “rat” in the workplace is not sufficient to be an adverse employment action where no discipline was threatened, the whistleblower’s position was not changed, and the employer took action to remedy the situation. Clay McDonald v. Union Pacific Railroad Co., 2016-FRS-00034 (ALJ Aug. 20, 2019).

=='''Proving FRSA Whistleblower Retaliation'''==

A “contributing factor” is a factor that had any tendency to affect the employer’s decision to take an adverse action. It is an intentionally low bar that allows an employee to prevail even if his protected activity is only one of many factors the employer considered. Because of this, an employee is not required to prove pretext or retaliatory motive to satisfy the contributing factor standard.

“Neither motive nor animus is a requisite element of causation as long as protected activity contributed in any way—even as a necessary link in a chain of events leading to adverse activity.” Hutton v. Union Pacific R.R. Co., No. 11-091, 2013 WL 2450037, at *9 (ARB May 31, 2013).

For example, if an employee’s injury report led to an investigation, which in turn led to discipline, the protected conduct (reporting the injury) can be deemed a contributing factor in the adverse action. Araujo v. New Jersey Transit Rail Operations, Inc., 708 F.3d 152 (3d Cir. 2013). An FRSA plaintiff “need not demonstrate the existence of a retaliatory motive on the part of the employee taking the alleged prohibited personnel action in order to establish that his disclosure was a contributing factor to the personnel action.” Araujo 708 F.3d at 158 (3d Cir. 2013) (quoting Marano v. Dep’t of Justice, 2 F.3d 1137, 1141 (Fed. Cir. 1993)).

Contributing factor causation can be shown by alleging facts regarding “temporal proximity, indications of pretext, and a change in the employer’s attitude toward the employee after he engages in protected activity.” Rookaird v. BNSF Ry. Co., No. C14-176RSL, 2015 WL 6626069, at *2 (W.D. Wash. Oct. 29, 2015).

Circumstantial evidence may include a wide variety of evidence, such as temporal proximity, indications of pretext, inconsistent application of an employer’s policies, an employer’s shifting explanations for its actions, antagonism or hostility toward a complainant’s protected activity, the falsity of an employer’s explanation of the adverse action taken, and a change in the employer’s attitude toward the complainant after he or she engages in protected activity. Bechtel v. Competitive Techs., Inc., ARB No. 09-052, ALJ No. 2005-SOX-033, slip op. at 13 (ARB Sept. 30, 2011).

If a complainant proves pretext, it may be inferred that his protected activity contributed to the termination. Riess v. Nucor Corp., ARB 08-137, 2008-STA-011, slip op. at 6 (ARB Nov. 30, 2010).

Proof of animus towards protected activity may be sufficient to demonstrate discriminatory motive. Sievers v. Alaska Airlines, Inc., ARB No. 05-109, ALJ No. 2004-AIR-028, slip op. at 4-5 (ARB Jan. 30, 2008). “[R]idicule, openly hostile actions or threatening statements,” may serve as circumstantial evidence of retaliation. Timmons v. Mattingly Testing Services, 1995-ERA-00040 (ARB June 21, 1996).

“Where protected activity and unfavorable employment actions are inextricably intertwined, causation is established without the need for circumstantial evidence; however, such -33 -evidence may certainly bolster the causal relationship.” Benjamin v. Citationshares Management, L.L.C., ARB No. 12-029, ALJ No. 2010-AIR-001, slip op. at 12 (ARB Nov. 5, 2013).

=='''Retaliatory Investigations Against Whistleblowers'''==

Under certain whistleblower protection laws, a retaliatory investigation can be actionable. Two cases decided under the [https://www.zuckermanlaw.com/railroad-safety-whistleblower-protection-lawyers/ Federal Rail Safety Act (FRSA)] outline when an employer’s investigation into an employee’s conduct may be considered actionable retaliation.

[https://www.oalj.dol.gov/PUBLIC/ARB/DECISIONS/ARB_DECISIONS/FRS/12_003.FRSP.PDF?_ga=2.243945027.732576337.1607740563-27394514.1607198690 In Vernace v. Port Authority Trans-Hudson Corp.], ARB No. 12-003, ALJ No. 2010-FRS-018 (ARB Dec. 21, 2012), Laura Vernace filed a complaint with the Occupational Safety and Health Administration (OSHA) alleging that her employer, Port Authority Trans-Hudson Corporation (PATH) violated the FRSA by retaliating against her after she filed an injury report that disclosed an injury she incurred from sitting on a broken chair at work. Soon after she filed the injury report, PATH sent her a charging letter accusing her of “fail[ing] to exercise . . . care and utilize safe work practices to prevent injury” when she did not inspect the chair before sitting on it. A year-long investigation ensued.

OSHA found a violation of the FRSA anti-retaliation law, and the ALJ also determined that PATH unlawfully discriminated against Vernace. In affirming the ALJ’s findings, the ARB held that Path took an adverse action against Vernace when it subjected her to a disciplinary investigation. The ARB noted that the ALJ rightly stated that the FRSA regulations prohibit “intimidating” and “threatening” actions. Further, the ARB explained that Congress had expressly included “threatening discipline” as prohibited discrimination under the FRSA.

PATH contended that it had initiated the disciplinary investigation because of Vernace’s allegedly unsafe use of a chair and not because she submitted an injury report. The ALJ and ARB, however, found that this distinction ignored the plain language of the statute as well as the FRSA’s legislative history citing abuse and intimidation practices often inflicted on railroad workers for reporting or attempting to report work-related injuries.

In Perez v. BNSF Railway Co., ARB Nos. 2017-0014, 2017-0040, ALJ No. 2014-FRS-00043 (ARB Sept. 24, 2020), the ARB clarified the types of investigations that can constitute actionable retaliation, and overturned Vernace to the extent that it stood for the proposition that all disciplinary investigations are adverse actions. Citing Burlington Northern & Santa Fe Ry. Co. v. White, 548 U.S. 53 (2006), the ARB held that all adverse actions, including alleged retaliatory investigations, must be considered in context, focusing on whether the action would dissuade a reasonable worker from engaging in protected activity.

Perez worked as a machinist for BNSF and was injured on the job while trying to prevent a door from falling off a train and onto another employee. He reported the injury to his supervisor and saw a doctor at an occupational clinic, per the instruction of a BNSF nurse case manager. Although he identified his injury in an injury report form as a strained hamstring, he attempted to tell the doctor about back pain four times during the course of treatment, but the doctor told him repeatedly that he did not need an MRI or to see a specialist and should instead give it some time to heal. Perez testified that he believed that the doctor worked for BNSF, and therefore assumed that he had reported his back injury to his employer. BNSF, however, alleged that Perez did not report the back injury to a regular BNSF employee until two years later. Perez testified that he had also reported his injury and the incident to a company claims manager, who advised him to wait to submit a claim.

Perez sought treatment for leg and back injuries from his primary care physician and an orthopedic specialist but did not inform BNSF about the treatment until two years after his injury, when he sought a release for back surgery, which was scheduled for the next day. He and his union representative met with the yard foreman, who asked if Perez had informed anyone about the back injury. The foreman stated that the doctor Perez had reported the injury to was not a company doctor, and the claims manager gave a conflicting version of the conversation he and Perez had had two years earlier.

BNSF sent Perez a notice of investigation a month later informing him that the investigation was prompted by an allegation of late reporting of a back injury and an allegation of dishonesty based on Perez’s assertion that the claims manager refused to take his statement. At the close of the investigation, the manager in charge of the company’s discipline policy recommended no discipline, and Perez returned to work having lost no pay, seniority, or benefits.

Citing the ARB’s decision in Vernace, the ALJ rejected BNSF’s claim that an investigation that does not result in discipline is not an adverse action, and held that BNSF’s investigation of Perez was retaliatory and constituted an actionable adverse employment action.

On appeal, the ARB held that a disciplinary charge and related investigation alone do not automatically constitute actionable adverse actions. Investigations may be adverse actions when those investigations are retaliatory, pretextual, performed in bad faith, or harassing. And an investigation might be an adverse action where it accompanies other material consequences that could affect an employee’s terms and conditions of employment or that might otherwise dissuade a reasonable employee from engaging in protected activity.

In remanding the case to the ALJ, the ARB directed the ALJ to determine whether BNSF’s investigation was bad-faith harassment, or if instead, it had been a good-faith, routine investigation to determine whether a violation of the company’s policies had occurred. Where a disciplinary investigation was retaliatory, harassing, and made in bad faith, a court may find that the investigation is an actionable adverse action.

=='''Affirmative Defense for Rail Carriers in FRSA Whistleblower Retaliation Cases'''==

A rail carrier can escape liability if it demonstrates by clear and convincing evidence it would have taken the adverse action absent protected activity.

A key method to prove the same-decision affirmative defense is comparator evidence. But FRSA whistleblower should scrutinize such evidence carefully to test whether it is truly relevant. For example, if a rail carrier terminates a whistleblower for discrepancies in the whistleblower’s protected disclosure, evidence of discipline for patently and materially false hearing testimony is not relevant.

It is also important to consider “the proportional relationship between the adverse actions and the bases for the actions.” See Speegle v. Stone & Webster Constr., Inc., ARB Case No. 13-074, 2014 WL 1758321, at *7 (Dep’t of Labor Admin. Review Bd. Apr. 25, 2014).

=='''Damages and Remedies for FRSA Whistleblowers'''==

A prevailing whistleblower can obtain a wide range of remedies, including: (1) reinstatement, (2) back pay, (3) compensatory damages, (4) attorney fees and litigation costs; and (5) punitive damages up to $250,000.

In 2017, the First Circuit affirmed an award of $250,000 in punitive damages, the maximum amount that the FRSA allows, where rail carrier Pan Am “utilized the [disciplinary] process to intimidate and discourage protected activity.” Pan Am Railways, Inc. v. United States Department of Labor, ___ F.3d ___, 2017 U.S. App. LEXIS 7047 (1st Cir. April 21, 2017). In that case, the ALJ specifically found that Pan Am had willfully retaliated against the whistleblower for filing an OSHA complaint and that it had “consciously disregarded Raye’s statutorily-protected rights under the FRSA, and in fact intentionally interfered with the exercise of those rights.”

=='''FRSA Statute of Limitations'''==

The statute of limitations to file a FRSA whistleblower retaliation claim is 180 days. As the Third Circuit held in Guerra v. Consolidated Rail Corporation, Court of Appeals, No. 18-2471, (3rd Cir. 2019, the FRSA’s statute of limitations is a nonjurisdictional claim-processing rule. However, failing to file within the statute of limitations will likely result in the dismissal of the claim.

=='''Demonstrating a Protected Disclosure'''==

A September 2021 Second Circuit decision in Ziparo v. CSX Transportation, Inc., 20-1196-cv (2d Cir. Sept 24, 2021) holds that complaints of stressful and distracting work conditions may well fall within the scope of “hazardous safety or security condition[s]” under § 20109(b)(1)(A). The court also held that “a railroad employee engages in protected activity under § 20109(b)(1)(A) when she reports what she subjectively believes to be a hazardous safety or security condition irrespective of whether that understanding is objectively reasonable.”

=='''National Transit Systems Security Act'''==

In August 2007, President Bush signed The Implementing Recommendations of the 9/11 Commission Act of 2007 ("9/11 Act"). The 9/11 Act includes ''''The National Transit Systems Security Act of 2007''' (NTSSA), which provides whistleblower protection to public transportation employees who disclose information about perceived violations of federal law concerning public transportation.

=='''Protected Activities Under NTSSA'''==

An employee engages in protected activity by:

*Reporting a hazardous safety or security condition
*Refusing to work when confronted by a hazardous safety or security condition
*Refusing to authorize the use of any safety or security related equipment, track or structures under hazardous conditions
*Providing information or assisting an investigation regarding conduct that the employee reasonably believes constitutes a violation of Federal law relating to public transportation safety or security, fraud, waste or abuse of federal grants or other funds intended to be used for public transportation safety or security
*Being perceived by the employer to have engaged in the protected activity
*Refusing to violate a federal law
*Refusing to assist the violation of a federal law
*Filing an employee protection complaint under NTSSA
*Cooperating with a safety or security investigation conducted by the DOT, DHS or NTSB
*Furnishing information to the DOT, DHS, NTSB or any federal, state, or local law enforcement agency regarding an accident resulting in death or injury to a person in connection with public transportation.

An ''''employee need not prove that his disclosure is correct.''' Instead, the NTSSA whistleblower protection statute applies a "reasonable belief" standard. Under that standard, a reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation of the enumerated transportation safety laws is protected. To determine whether the employee's disclosure is objectively reasonable, the fact finder considers whether a reasonable person with the employee's training and experience would reasonably believe that the employer was violating the relevant law or regulation.

=='''Prohibited Adverse Actions'''==

NTSSA prohibits an employer from discriminating against employees because of their whistleblowing activities. This includes:

*intimidation
*blacklisting
*termination
*suspension
*demotion
*reduction in salary
*failure to hire
*harassment

=='''Burden of Proof in An NTSSA Case'''==

To prevail in an NTSSA case, an employee must establish that he engaged in a protected activity and that the protected activity was a contributing factor in the unfavorable personnel action. If the employee successfully establishes that his protected activity was a contributing factor to the adverse action, he will win unless an employer can prove by clear and convincing evidence that it would have taken the same unfavorable personnel action in the absence of the protected activity.

=='''Remedies Available for a Prevailing Employee'''==

A prevailing employee is entitled to reinstatement, back pay, and compensatory damages. In addition, a prevailing employee can recover exemplary or punitive damages up to $250,000.

=='''Procedure for filing a NTSSA retaliation complaint'''==

Employees who believe they were subjected to retaliation for reporting alleged violations of the NTSSA may file a complaint with the Department of Labor within 180 days of the employee becoming aware of the retaliatory action. OSHA investigates the claim and can order preliminary relief, including reinstatement. Either party can appeal OSHA's determination by requesting a de novo hearing before a DOL Administrative Law Judge. If DOL does not issue a final decision within 210 days of the employee filing the complaint, the employee can remove the complaint to a federal district court.

=='''Consumer Product Safety Improvement Act'''==

Prompted by concerns of lead-laden children’s toys and insufficient regulation of consumer product safety, consumer product safety, Congress enacted the Consumer Product Safety Improvement Act of 2008 (CPSIA) on August 14, 2008. The CPSIA strengthens the authority of the CPSC and imposes new certification requirements on manufacturers and distributors.

To ensure that workers can blow the whistle on consumer product safety issues, Congress included in the CPSIA a whistleblower protection provision that prohibits manufacturers, private labelers, distributors, and retailers from retaliating against an employee because the employee provided information to an employer, a regulatory agency, or a state attorney general about a reasonably perceived violation of any law enforced by the CPSC. The regulations implementing the CPSC whistleblower protection law are available by clicking here.

The CPSIA whistleblower law applies to manufacturers, private labelers, distributors, and retailers. A consumer product is any article, or component part thereof, produced or distributed:

*(i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or
*(ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise.

15 U.S.C. § 2052(a)(5). A product that is not “customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a consumer” will likely not be deemed a consumer product. 15 U.S.C. § 2052(a)(5)(A).

=='''Protected Whistleblowing Under the Consumer Product Safety Improvement Act'''==

The [https://uscode.house.gov/view.xhtml?req=(title:15%20section:2087%20edition:prelim)%20OR%20(granuleid:USC-prelim-title15-section2087)&f=treesort&edition=prelim&num=0&jumpTo=true CPSIA] prohibits an employer from terminating or otherwise discriminating against an employee because the employee:

#provided information to the employer, the federal government, or a state attorney general “relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision” of an order, rule, regulation, standard, or ban enforced by the CPSC;
#testified, assisted, or participated in a proceeding concerning a violation of a CPSC rule or regulation, or
#refused to participate in an activity, policy, practice, or assigned task that the employee reasonably believes violates a CPSC rule or regulation.

Examples of protected whistleblowing include:

*Reporting violations of the standard for the flammability of children’s sleepwear;
*Disclosing information about the use of consumer patching compounds containing free-form asbestos;
*Reporting an employer’s violation of a safety standard for creating architectural glazing materials; and
*Reporting choking incidents involving marbles, small balls, latex balloons, and other small parts.

The CPSIA protects employees who blow the whistle in the normal course of performing their job duties.

=='''Prohibited Retaliation by the Consumer Product Safety Whistleblower Law'''==

The CPSIA prohibits a wide array of adverse employment actions, including termination and discrimination with respect to the employees’ pay, terms, conditions, or privileges of employment.

=='''Causation Standard Under the CPSIA'''==

To prevail in a CPSIA whistleblower action, the whistleblower must establish that protected whistleblowing was a contributing factor in the unfavorable personnel action. The whistleblower need not prove that protected conduct was the sole factor in the employer’s decision to take the adverse employment action.

=='''Remedies or Damages Available to Consumer Product Safety Whistleblowers'''==

“Make whole” relief includes:

*reinstatement,
*back pay,
*uncapped compensatory damages,
*attorney fees and litigation costs, including expert witness fees.

=='''How to File a CPSIA Whistleblower Retaliation Action'''==

The statute of limitations for filing a consumer product safety whistleblower claim is 180 days from the date on which the employee is first informed of the adverse employment action (which can be earlier than the effective date of the adverse action).

After the complaint is filed, the Occupational Safety and Health Administration (OSHA) investigates the complaint and may order preliminary relief, including reinstatement of the whistleblower to his previous position. Either the whistleblower or the employer can appeal OSHA’s determination by requesting to have the full case heard by a Dept. of Labor administrative judge.

If the Department of Labor has not issued a final decision with 210 days of the filing of the complaint, the whistleblower can remove the case to federal court.

=='''Food Safety Modernizations Act'''==

The FDA Food Safety Modernization Act (FSMA), which imposes stricter food safety standards and grants the Food and Drug Administration greater authority to regulate tainted food, includes a whistleblower protection provision. The FMSA was prompted in part by numerous instances of fatal food contamination that revealed insufficient regulation and oversight of food production, including outbreaks of contaminated peanuts, eggs, and produce. The Centers for Disease Control and Prevention estimate that there are 76 million cases of foodborne disease each year in the United States, 5,000 of which result in death.

To ensure that workers can disclose food safety concerns without fear of reprisal, Congress included in the FMSA a robust whistleblower protection provision (Section 402) that protects workers engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food. The bill must be reconciled with a House version of the bill, H.R. 2749, which passed on July 30, 2009, and final passage is expected to occur by the end of the year.

Section 402 applies to any entity “engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.”

=='''Broad Scope of Protected Conduct'''==

The FSMA prohibits retaliation against an employee who has:

#Provided, caused to be provided, or is about to provide or cause to be provided to the employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of this Act or any order, rule, regulation, standard, or ban under this Act, or any order, rule, regulation, standard, or ban under this Act;
#Testified or is about to testify in a proceeding concerning such violation;
#Assisted, participated or is about to assist or participate in such a proceeding; or
#Objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of this Act, or any order, rule, regulation, standard, or ban under this Act.

A Section 402 complainant need not demonstrate that she disclosed an actual violation of a food safety law or regulation. Instead, Section 402 employs a “reasonable belief” standard that the Department of Labor (DOL) and federal courts have construed as protecting a reasonable but mistaken belief that an employer may have violated a particular law. See Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1001 (9th Cir. 2009) (“to encourage disclosure, Congress chose statutory language which ensures that an employee’s reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation of one of the six enumerated categories is protected.”) (internal quotation, citation omitted); Allen v. Admin. Review Bd., 514 F. 3d 468, 477 (5th Cir. 2008) (applying “reasonable belief” standard in a Sarbanes-Oxley whistleblower retaliation action); Kalkunte v. DVI Fin. Svcs., Inc., ARB Nos. 05-139 & 05-140, 2004-SOX-056 (ARB Feb. 27, 2009) (clarifying that a reasonable but mistaken belief is protected under SOX). The reasonable belief standard consists of both a subjective and objective component, and objective reasonableness “is evaluated based on the knowledge available to a reasonable person in the same factual circumstances with the same training and experience as the aggrieved employee.” Allen, 514 F.3d at 477.

The “duty speech” doctrine will not apply to FSMA retaliation claims, as the text specifically protects disclosures made “in the ordinary course of the employee’s duties.”

Some examples of protected conduct include the following:

#Reporting that imported cheese is being stored at the wrong temperature and is therefore susceptible to spoiling or containing harmful bacteria;
#Reporting that an additive harmful only to infants was added to infant formula;
#Reporting that bread is being stored in a facility infested with flies and rodents;
#Reporting that a peanut butter manufacturer did not recall peanut butter it knew might have been made using a batch of contaminated peanuts; and
#Reporting that a chemical used to lubricate sorting machines has contaminated dietary supplements.

=='''Prohibited Whistleblower Retaliation'''==

An employer is prohibited from discharging or “in any manner discriminat[ing] against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment.” The DOL’s Administrative Review Board (ARB) applies the Burlington Northern standard to analogous whistleblower protection statutes, and therefore Section 402 will prohibit not only tangible adverse actions, but also any action that may dissuade a reasonable employee from engaging in further protected activity. See Melton v. Yellow Transp. Inc., ARB No. 06-052, 05-140, ALJ No. 2005-STA-002 (ARB Sept. 30, 2008) (holding that the Burlington Northern standard applies to whistleblower retaliation claims before the DOL).

Prohibited acts of retaliation will likely include:

*termination
*suspension
*demotion
*reduction in pay
*failure to promote
*failure to hire
*diminution in job duties
*blacklisting

=='''Employee-Favorable Causation Standard and Burden of Proof'''==

A complainant can prevail merely by showing by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action. A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision. See Klopfenstein v. PPC Flow Techs. Holdings, Inc., ARB No. 04-149 at 18, ALJ No. 2004-SOX-11 (ARB May 31, 2006) (internal citation omitted). Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee’s protected conduct. Clear and convincing evidence is “[e]vidence indicating that the thing to be proved is highly probable or reasonably certain.” See Peck v. Safe Air Int’l, Inc., ARB No. 02-028 at 9, ALJ No. 2001-AIR-3 (ARB Jan. 30, 2004).

=='''Remedies for Whistleblower Retaliation'''==

Remedies include:

*injunctive relief
*reinstatement
*back pay with interest
*“special damages”
*attorney’s fees
*litigation costs
*expert witness fees

Where reinstatement is unavailable or impractical, front pay may be awarded. “Special damages” has been construed under similar whistleblower protection statutes to include damages for pain, suffering, mental anguish and an injured career or reputation. See, e.g., Kalkunte, ARB Nos. 05-139 & 05-140 at 15 (SOX case awarding complainant emotional distress damages); Hannah v. WCI Communities, 348 F. Supp. 2d 1332, 1334 (S.D. Fla. 2004) (“a successful Sarbanes-Oxley Act plaintiff cannot be made whole without being compensated for damages for reputational injury that diminished plaintiff’s future earning capacity”). A complainant may also be entitled to damages for loss to his reputation as part of the “make whole” remedy provided by the statute. See Hannah, 348 F. Supp. 2d at 1334.

=='''Procedures Governing Section 402 Whistleblower Retaliation Claims'''==

A complainant must file her complaint with the Occupational Safety and Health Administration (OSHA) within 180 days after the date on which the retaliatory adverse action occurred. OSHA will investigate the claim and can order preliminary relief, including reinstatement. Either party can appeal OSHA’s determination by requesting a de novo hearing before a DOL Administrative Law Judge (ALJ), but objecting to an order of preliminary relief will not stay the order of reinstatement. Discovery before an ALJ typically proceeds at a faster pace than discovery in state or federal court, and the hearings are less formal than federal court trials. For example, ALJs are not required to apply the Federal Rules of Evidence. Either party can appeal an ALJ’s decision to the ARB and can appeal an ARB decision to the circuit court of appeals in which the adverse action took place.

If the Secretary of Labor fails to issue a final decision within 210 days of the filing of a complaint, or within 90 days after receiving a written determination from OSHA, the complainant can remove her claim to federal court for de novo review and either party may request a trial by jury. Section 402 does not preempt or diminish any other remedy for retaliation provided by Federal or State law, and therefore a Section 402 complainant could remove the claim to federal court and add additional claims, such as a common law wrongful discharge action, which would provide an opportunity to obtain punitive damages.

=='''Criminal Antitrust Anti-Retaliation Act'''==

The [https://www.zuckermanlaw.com/wp-content/uploads/Criminal-Antitrust-Anti-Retalia-tion-Act-of-2019.pdf Criminal Antitrust Anti-Retaliation Act,] which was signed into law on December 23, 2020, protects whistleblowers against retaliation for disclosing evidence of criminal cartel activity.

=='''Protection Against Retaliation under the Criminal Antitrust Anti-Retaliation Act'''==

The Criminal Antitrust Anti-Retaliation Act protects any employee, contractor, subcontractor, or agent of an employer.

The Criminal Antitrust Anti-Retaliation Act does not apply where:

*the covered individual planned and initiated a violation or attempted violation of the antitrust laws;
*the covered individual planned and initiated a violation or attempted violation of another criminal law in conjunction with a violation or attempted violation of the antitrust laws; or
*the covered individual planned and initiated an obstruction or attempted obstruction of an investigation by the Department of Justice of a violation of the antitrust laws.

=='''Whistleblowing Protected Under the Criminal Antitrust Anti-Retaliation Act'''==

The Act protects an employee (1) providing information to an employer, a federal regulatory or law enforcement agency, or Congress concerning an act or omission the individual reasonably believes to be a violation of the antitrust laws (section 1 or 3 of the Sherman Act) or a violation of another criminal law committed in conjunction with a potential violation of the antitrust laws; or (2) participating in, or otherwise assisting, an investigation relating to such a violation.

Criminal prosecutions of Sherman Act violations are typically limited to intentional and clear violations such as price fixing, bid rigging, and market allocation among competitors (also known as “horizontal agreements”). According to the Department of Justice’s Antitrust Resource Manual, price fixing generally involves any agreement between competitors to tamper with prices or price levels, or terms and conditions of sale for commodities or services. Bid rigging generally involves an agreement or arrangement among companies to determine the successful bidder in advance of a bid letting at a price set by the successful bidder. Horizontal customer allocation is an agreement among competitors at the same level of distribution of a product or service that each will service certain designated customers or classes of customers and will not attempt to compete, or will limit the manner in which they will compete, for the business of customers allocated to a competitor.

Note that some forms of protected conduct under the Criminal Antitrust Anti-Retaliation Act are also protected under other whistleblower protection laws. For example, a disclosure about bid-rigging to obtain a contract with a federal agency can also be protected conduct under the Defense Contractor Whistleblower Protection Act and the False Claims Act.

=='''Type of Retaliation Prohibited Against Antitrust Whistleblowers'''==

The Criminal Antitrust Anti-Retaliation Act prohibits a wide range of retaliatory acts, including discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower in the terms and conditions of employment.

The catch-all category of retaliation (“in any other manner” discriminating against a whistleblower) includes non-tangible employment actions, such as “outing” a whistleblower in a manner that forces the whistleblower to suffer alienation and isolation from work colleagues. See Menendez v. Halliburton, Inc., ARB Nos. 09-002, -003, ALJ No. 2007- SOX- 5 (ARB Sept 13, 2011). An employment action can constitute actionable retaliation if it “would deter a reasonable employee from engaging in protected activity.” Id. at 20.

=='''Burden of Proof for an Antitrust Whistleblower'''==

The Criminal Antitrust Anti-Retaliation Act applies the causation standard and burden-shifting framework set forth in the [https://www.law.cornell.edu/uscode/text/49/42121 AIR21 Whistleblower Protection Law]. Under that framework, the whistleblower prevails by proving that their protected whistleblowing was a contributing factor in the unfavorable personnel action taken by their employer. The Department of Labor Administrative Review Board has emphasized that the standard is low and “broad and forgiving”; protected activity need only play some role, and even an “[in]significant” or “[in]substantial” role suffices. Palmer v. Canadian Nat’l R.R., ARB No. 16-035, ALJ No. 2014-FRS-154, at 53 (ARB Sept. 30, 2016) (emphasis in original). Examples of circumstantial evidence that can establish “contributing factor” causation include:

*temporal proximity;
*the falsity of an employer’s explanation for the adverse action taken;
*inconsistent application of an employer’s policies;
*an employer’s shifting explanations for its actions;
*animus or antagonism toward the whistleblower’s protected activity; and
*a change in the employer’s attitude toward the whistleblower after they engage in protected activity.

Once the whistleblower proves that their protected conduct was a contributing factor in the adverse action, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the whistleblower engaging in protected conduct.

=='''Remedies or Damages in an Antitrust Whistleblower Retaliation Case'''==

A prevailing antitrust whistleblower is entitled to make-whole relief, which includes:

*reinstatement with the same seniority status that the whistleblower would have had, but for the discrimination;
*back pay, with interest; and
*compensation for any special damages sustained as a result of the discrimination including litigation costs, expert witness fees, and reasonable attorneys’ fees.

=='''Deadline or Statute of Limitations to File an Antitrust Whistleblower Retaliation Case'''==

The statute of limitations for an antitrust whistleblower retaliation claim is 180 days from the date that the employee was first informed of the adverse action.

=='''Antitrust Whistleblower Retaliation Case Adjudication'''==

An antitrust whistleblower retaliation case must be filed initially with OSHA, which will investigate the claim. If OSHA determines that there is [https://www.zuckermanlaw.com/sp_faq/reasonable-cause-standard-osha-whistleblower-investigation/ reasonable cause] to believe that a violation occurred, OSHA can order relief, including reinstatement of the whistleblower.

Either party can appeal OSHA’s determination by requesting a de novo hearing before the DOL Office of Administrative Law Judges (OALJ), but an employer’s objection to an order of preliminary relief will not stay the order of reinstatement. Once an antitrust retaliation claim has been pending before the DOL for more than 180 days, the whistleblower can remove the claim to federal court.

=='''Purpose of the Criminal Antitrust Anti-Retaliation Act'''==

Senators Grassley and Leahy, the sponsors of the Criminal Antitrust Anti-Retaliation Act, offered the following explanation of the purpose of the Act:

“Competition is essential for a thriving, affordable and innovative marketplace. When our antitrust laws are violated, consumers are often left paying the price. The Criminal Antitrust Anti-Retaliation Act encourages and shields from reprisal private sector employees to shine a light on activities that violate our antitrust laws. This bipartisan bill is an important step to safeguarding fair marketplaces as well as the whistleblowers who support them. It’s earned broad support in both chambers of Congress, and I urge President Trump to sign it into law without delay,” Grassley said

“Our country has a proud history of protecting whistleblowers who expose wrongdoing . . . In an era where dominant corporations aggressively seek to expand their profits and quash competitors, our laws should protect whistleblowers who take significant risks to report criminal antitrust violations like price-fixing that undermine free and fair competition . . . ,” Leahy said.

The Criminal Antitrust Anti-Retaliation Act implements a recommendation made in a July 2011 [https://www.gao.gov/assets/gao-11-619.pdf GAO Report about criminal cartel enforcement.]

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IRS Whistleblower Reward Program

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The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-§-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

*the whistleblower provides a tip that the IRS decides to take action on (a whistleblower cannot force the IRS to act on a tip);
*the amount in dispute (the tax underpayment, including interest and penalties) exceeds $2 million (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
*the IRS collects tax underpayments resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on large-scale tax fraud in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation.] Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here.]

=='''IRS Whistleblower Reward Program’s Success'''==

Since 2007, the IRS Whistleblower Office has issued more than '''$931 million''' in awards to tax whistleblowers based on the collection of '''$5.7 billion''' in proceeds. During FY 2018 and FY 2019, the IRS awarded more than '''$430 million to tax fraud whistleblowers, and whistleblowers enabled the IRS to recover more than '''$2 billion.''' See the [https://web.archive.org/web/20201024174335/https://www.irs.gov/pub/whistleblower/fy18_wo_annual_report_final.pdf FY 2018 report of the IRS Whistleblower Program] and the [https://web.archive.org/web/20200825021735/https://www.irs.gov/pub/whistleblower/fy19_wo_annual_report_final.pdf FY 2019 report of the IRS Whistleblower Program.]

A denial of an award or reduction of up to 10% may be made in cases where the information provided to the IRS is:

*brought by an individual who “planned and initiated” the actions that led to the underpayment of tax.
*based on information derived from a judicial or administrative hearing; a governmental report, hearing, audit, or investigation; or the news media.

Tax whistleblower awards are subject to appeal to the U.S. Tax Court within 30 days of an IRS determination. Additional information on the process can be found [https://www.irs.gov/compliance/what-happens-to-a-claim-for-an-informant-award-whistleblower here.]

If a tax whistleblower case does not meet the $2 million threshold (or cases involving individual taxpayers with gross income of less than $200,000), a whistleblower award may still pursue an award under section 7623(a). Under this section, the IRS may issue a discretionary award to a whistleblower for tips that lead to “detecting underpayments of tax, or bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same.” The awards under this program are a maximum of 15% of the proceeds collected, capped at $10 million. It should be stressed that awards under this program are discretionary, whereas awards under 7623(b) are mandatory.

=='''IRS Whistleblower Awards Attorneys'''==

Since the inception of the IRS Whistleblower Program, the IRS has issued more than '''$931 million''' in awards to whistleblowers. Since FY 2012, the IRS issued more than $841 million in awards:

*In FY 2019, the IRS issued 181 awards, totaling more than [https://web.archive.org/web/20200825021735/https://www.irs.gov/pub/whistleblower/fy19_wo_annual_report_final.pdf $102 million;]
*In FY 2018, the IRS issued 217 awards, totaling more than [https://web.archive.org/web/20201024174335/https://www.irs.gov/pub/whistleblower/fy18_wo_annual_report_final.pdf $312 million;]
*In FY 2017, the IRS issued 242 awards, totaling more than [/https://web.archive.org/web/20201111190319/https://www.irs.gov/pub/whistleblower/fy17_wo_annual_report_final.pdf $33 million;]
*In FY 2016, the IRS issued 418 awards, totaling more than [https://web.archive.org/web/20201029151626/https://www.irs.gov/pub/whistleblower/fy16_wo_annual_report_final.pdf $61 million;]
*In FY 2015, the IRS issued 99 awards, totaling more than [https://www.zuckermanlaw.com/irs-whistleblower-program-paid-more-than-103m-to-whistleblowers-in-fy2015/ $103 million;]
*In FY 2014, the IRS issued 101 awards, totaling more than [/https://web.archive.org/web/20201029151635/https://www.irs.gov/pub/whistleblower/WB_Annual_Report_FY_14_Final_Signature_June_11-signed%20corrected.pdf $52 million dollars;]
*In FY 2013, the IRS issued 122 awards, totaling more than [ttps://web.archive.org/web/20201030221451/https://www.irs.gov/pub/whistleblower/Whistleblower_Annual_report_FY_13_3_7_14_52549.pdf $53 million dollars; and]
*In FY 2012, the IRS made 128 awards, totaling more than [https://web.archive.org/web/20201103060402/https://www.irs.gov/pub/whistleblower/2012%20IRS%20Annual%20Whistleblower%20Report%20to%20Congress_mvw.pdf $125 million dollars.]

Notable successes of the IRS Whistleblower Program include:

*Bradley Birkenfeld was awarded $104 million after blowing the whistle on the Swiss Bank, UBS, for helping wealthy Americans hide their assets and evade taxes.
*An unidentified whistleblower received $38 million for exposing a corporate tax avoidance scheme.
*In Whistleblower 21276-13W v. CIR, two whistleblowers were issued an award for more than $17.5 million. Importantly, the Tax Court’s Final Order confirmed that when the IRS determines an award based on “collected proceeds,” this encompasses all dollars collected by the U.S. government, including criminal penalties, FBAR, etc.
*An unidentified accountant received $4.5 million after discovering a $20 million-plus tax liability at a Fortune 500 company. The accountant reported the liability and was subsequently ignored by the company.
*Wall Street insider nets a $2 million reward after exposing an alleged tax avoidance scheme by manufacturer Illinois Tools Works. This was the third seven-figure reward from the IRS for the anonymous whistleblower.

=='''IRS Whistleblower Process'''==

The IRS Whistleblower Office has recently released Publication 5251 – The Whistleblower Claim Process. The new publication provides general guidance on the tax whistleblower program and clarity on the types of information whistleblowers should provide to the office. In addition, the publication explores what happens to claims after the IRS receives them, communication with the IRS after a submission, and a process timeline for claims.

=='''Eligibility for Tax Whistleblower Reward'''==

Under the new tax whistleblower statute, the IRS is required to issue a reward to tax whistleblowers of between 15% and 30% of collected proceeds from tax fraud or tax underpayments if:

*the whistleblower provides specific and credible information that the IRS decides to take action on (a whistleblower cannot force the IRS to act on a tip);
*the information relates to tax underpayments of over $2 million (or if the subject of the claim is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
*the IRS collects tax underpayments resulting from the action (including any related actions).

In the publication, the IRS outlines the types of “specific and credible” information that whistleblowers should provide when submitting a tip. This includes:

*A description of the amounts due, including a written narrative explaining the issue(s);
Information to support the narrative;
*A description of the documents or supporting evidence not in the whistleblower’s possession or control; and
*An explanation of how the whistleblower obtained the information and if there is any relationship to the subject of the claim.

It is important for tax whistleblowers to provide the best information available as it may support the increase of a reward percentage (among other factors).

=='''Submitting a Whistleblower Tip to the IRS'''==

Once a whistleblower submits a tip, the Whistleblower Office will determine if it has merit, and then forward the tip to the appropriate operating division for further development. The publication notes this initial review generally takes 30-90 days and the Subject Matter Experts (SME) examination will take an additional 90 days. During the SME’s examination, the whistleblower may be contacted to make sure that the IRS fully understands the information submitted by the whistleblower.

Thereafter, if the IRS does not pursue the claim, the agency will send the whistleblower a claim denial letter. Alternatively, if the IRS decides to pursue the claim, whistleblowers are able to receive updates from the IRS concerning the progress of the investigation. Under the [https://web.archive.org/web/20220708143836/https://www.congress.gov/116/plaws/publ25/PLAW-116publ25.pdf Taxpayer’s First Act], which was enacted on July 1, 2019:

The Secretary shall disclose to an individual providing information relating to any purpose described in paragraph (1) or (2) of section 7623(a) the following:

#(i) Not later than 60 days after a case for which the individual has provided information has been referred for an audit or examination, a notice with respect to such referral.
#(ii) Not later than 60 days after a taxpayer with respect to whom the individual has provided information has made a payment of tax with respect to tax liability to which such information relates, a notice with respect to such payment.
#(iii) Subject to such requirements and conditions as are prescribed by the Secretary, upon a written request by such individual—
(I) information on the status and stage of any investigation or action related to such information, and
(II) in the case of a determination of the amount of any award under section 7623(b), the reasons for such determination. Clause (iii) shall not apply to any information if the Secretary determines that disclosure of such information would seriously impair Federal tax administration. Information described in clauses (i), (ii), and (iii) may be disclosed to a designee of the individual providing such information in accordance with guidance provided by the Secretary.

=='''Additional Information About the IRS Whistleblower Program'''==

[https://www.accountingtoday.com/opinion/whistleblower-protections-for-accountants-and-tax-professionals-bolstered-by-new-law Whistleblower protections for accountants and tax professionals bolstered by new law]

[https://www.zuckermanlaw.com/sp_faq/can-tax-whistleblowers-remain-anonymous/ Can tax whistleblowers remain anonymous?]

[https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ Are whistleblowers protected against retaliation for disclosing tax fraud?]

[https://www.zuckermanlaw.com/irs-whistleblower-office-issues-new-guidance-irs-whistleblower-reward-process/ IRS Whistleblower Office Issues New Guidance on IRS Whistleblower Reward Process]

[https://www.zuckermanlaw.com/irs-whistleblower-office-calls-on-congress-to-protect-whistleblowers/ IRS Whistleblower Office Calls on Congress to Protect Whistleblowers]

[https://www.zuckermanlaw.com/audit-reveals-irs-whistleblower-program-needs-improvements/ Audit Reveals IRS Whistleblower Program Needs Improvements]

[https://www.zuckermanlaw.com/irs-whistleblower-program-paid-more-than-103m-to-whistleblowers-in-fy2015/ IRS Whistleblower Program Paid More than $103M to Whistleblowers in FY2015]

IRS Whistleblower Reward Program

2025-02-14T03:30:27Z

Admin: Created page with "The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacte..."

Main Page

2025-02-14T03:21:49Z

Admin:

Anti-Money Laundering Whistleblower Program

2025-02-14T03:18:20Z

Admin: Created page with "On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [/https://www.zuckermanlaw.com..."

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [/https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud against the government, securities fraud, tax fraud,] commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

=='''Eligibility for Anti-Money Laundering Whistleblower Reward'''==

[https://www.zuckermanlaw.com/wp-content/uploads/Section-6314-anti-money-laundering-whistleblower-rewards-and-protections.pdf Section 6314 of the AMLA] incentivizes whistleblowers to report money laundering by requiring Treasury to pay an award of up to 30 percent of collected monetary sanctions that it recovers in a judicial or administrative action brought under the Bank Secrecy Act that results in sanctions exceeding $1,000,000.

To be eligible for an award, the whistleblower must voluntarily provide original information to their employer, Treasury, or the Department of Justice

Whistleblowers abroad who are not U.S. citizens would be eligible for awards where the BSA violations they report are within the jurisdiction of U.S. law enforcement.

In contrast to the [https://www.accountingtoday.com/opinion/auditors-and-accountants-guide-to-sec-whistleblower-awards Dodd-Frank Act’s award eligibility rules,] the AMLA whistleblower reward law does not impose limitations on award eligibility for whistleblowers who gain information through the performance of an audit of financial statements. And it permits compliance personnel to obtain whistleblower awards in that the term “whistleblower” includes an individual who provides information relating to a violation “including as part of the job duties of the individual.

Fines for money laundering can be substantial. In February 2018, [https://www.bloomberg.com/news/articles/2018-02-15/u-s-bancorp-agrees-to-pay-528-million-over-money-laundering U.S. Bancorp/U.S. Bank paid $613 million] in fines and forfeitures to settle charges that it failed to maintain adequate safeguards against money laundering. In particular, U.S. Bancorp/U.S. Bank limited the number of transactions its systems would flag as suspicious and processed Western Union transactions for non-customers

=='''Submitting a Whistleblower Tip to FinCEN Anonymously'''==

If represented by an attorney, an AML whistleblower may submit a tip anonymously to FinCEN. Even at the time of a reward, a whistleblower’s identity is not made available to the public.

In addition, the AMLA requires Treasury and Justice to take steps to protect the confidentiality of whistleblower submissions. Any officer or employee of either agency must not disclose information provided by a whistleblower “which could reasonably be expected to reveal the identity of a whistleblower,” except where the agency is required to disclose the information to a defendant in a public proceeding instituted by the agency and in accordance with the Privacy Act.

An experienced AML whistleblower lawyer will be able to skillfully guide a whistleblower through the process, maximizing the likelihood that the whistleblower’s identity is not revealed to unauthorized parties.

=='''Monetary Sanctions Qualifying for an Award'''==

The monetary sanctions collected in any judicial or administrative action that can qualify for an AMLA whistleblower award include any monies, including penalties, disgorgement, and interest ordered to be paid, but excludes (i) forfeiture; (ii) restitution; and (iii) any victim compensation payment.

An AMLA whistleblower may also qualify for a “related action” award, which is any judicial or administrative action brought by (i) any appropriate federal authority; (ii) a state attorney general in connection with any criminal investigation; or (iii) any appropriate state regulatory authority, when the action is based on the original information provided by the whistleblower and led to the successful enforcement of the action by Treasury or Justice.

=='''Determining the Amount of an AMLA Whistleblower Award'''==

To determine the amount of an AMLA whistleblower award, Treasury will consider:

*the significance of the information provided by the whistleblower to the success of the covered judicial or administrative action;
*the degree of assistance provided by the whistleblower and any legal representative;
*the programmatic interest of Treasury in deterring the particular violations that the whistleblower disclosed; and
*additional relevant factors that Treasury will promulgate, which will likely echo the [https://web.archive.org/web/20220706074328/https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program-award-factors/ factors that the SEC employs to determine the amount of an SEC whistleblower award.]

=='''Protecting Anti-Money Laundering Whistleblowers Against Retaliation'''==

[https://www.zuckermanlaw.com/wp-content/uploads/Section-6314-anti-money-laundering-whistleblower-rewards-and-protections.pdf Section 6314(g) of the AMLA] creates a [https://www.zuckermanlaw.com/wp-content/uploads/Section-6314-anti-money-laundering-whistleblower-rewards-and-protections.pdf private right of action for whistleblowers who have suffered retaliation] for disclosing potential BSA violations to Treasury or Justice, a federal regulatory or law enforcement agency, Congress, or a person with supervisory authority over the whistleblower. It also protects a whistleblower assisting in any investigation or judicial or administrative action of Treasury or Justice based on or related to the information that the whistleblower disclosed to the government.

In contrast to [https://www.zuckermanlaw.com/sec-guidance-on-dodd-frank-whistleblower-protection-is-a-win-for-whistleblowers/ Dodd-Frank’s whistleblower protection provision,] AMLA-protected whistleblowing does not require a threshold showing that the whistleblower reported a potential BSA violation to the appropriate regulatory agency. Instead, internal whistleblowing alone is protected. Moreover, the whistleblower need not meet the AMLA requirements for award eligibility to be protected under the anti-retaliation provision.

Similar to the [https://www.zuckermanlaw.com/legal-services/sarbanes-oxley-whistleblower/ SOX whistleblower protection law,] the AMLA prohibits a wide range of retaliatory acts, including directly or indirectly discharging, demoting, suspending, threatening, blacklisting, harassing, or in any other manner discriminating against a whistleblower in the terms and conditions of employment due to the employee’s protected whistleblowing.

The causation standard in an AMLA retaliation claim is favorable to the whistleblower. To prevail, the whistleblower need only demonstrate that their protected whistleblowing was a [https://www.zuckermanlaw.com/clear-convincing-evidence-whistleblower-case/ contributing factor] in the unfavorable personnel action taken by their employer. Once the whistleblower demonstrates contributing factor causation, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the whistleblower engaging in protected conduct.

A prevailing AMLA whistleblower is entitled to reinstatement, double back pay with interest, uncapped compensatory damages, reasonable attorney fees, any other appropriate remedy with respect to the conduct that is the subject of the action.

AMLA retaliation claims must be filed initially with the Occupational Safety and Health Administration, and 180 days after filing, the whistleblower can remove the claim to federal court and try the case before a jury.

This new law will afford [https://www.zuckermanlaw.com/sp_faq/money_laundering_whistleblower_protection_law/ robust protection to whistleblowers] disclosing money laundering, but it will not apply to employees at credit unions and FDIC-insured depository institutions. Those employees can bring retaliation claims under weaker anti-retaliation laws that protect only whistleblowing to the government (not internal whistleblowing), impose a higher burden of causation, and provide anemic remedies. See 12 U.S.C. § 1831j; 12 U.S.C. §§ 1790b, 1790c. For the AMLA whistleblower program to succeed, Congress should eliminate this exception to the scope of AMLA whistleblower protection.

=='''Resources About the Anti-Money Laundering Whistleblower Reward Law'''==

*[https://www.fincen.gov/resources/fincens-mandate-congress Bank Secrecy Act]
*[https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X Bank Secrecy Act Regulations]
*[https://www.fincen.gov/frequently-asked-questions-regarding-fincen-suspicious-activity-report-sar Frequently Asked Questions] Regarding the FinCEN Suspicious Activity Report (SAR)
*[https://www.fincen.gov/answers-frequently-asked-bank-secrecy-act-bsa-questions Answers to Frequently Asked Questions] Bank Secrecy Act (BSA) Questions
*[https://www.buzzfeednews.com/fincen-files FinCEN Files investigation]
*FACT Coalition: [ Landmark Bill Ending Anonymous U.S. Companies Is Enacted Landmark Bill Ending Anonymous U.S. Companies Is Enacted]

False Claims Act

2025-02-14T02:58:15Z

Admin: /* FCA Anti-Retaliation Law Protects Efforts to Stop a Government Contractor from Defrauding the Government */

The False Claims Act authorizes whistleblowers, also known as '''qui tam “relators,”''' to bring suits on behalf of the United States against the false claimant and '''obtain a portion of the recovery,''' otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act penalizes those who submit or cause to be submitted false or fraudulent claims to the government for payment. It also penalizes those who make or use false statements to get a false or fraudulent claim paid.

False Claims Act relators are eligible to receive '''10% to 30% of the recovery.''' In an intervened case, the relator can obtain 15% to 25% of the recovery, depending upon the extent to which the person substantially contributed to the prosecution of the action.

In a non-intervened case, the relator can obtain between 25% to 30% of the recovery. Additionally, a relator who prevails in an FCA action—regardless of whether the government intervenes—is entitled to “reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730(d). Qui tam whistleblower lawsuits have enabled the government to recover more than '''$40 billion.'''

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.''' In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

A '''qui tam whistleblower''' can be eligible for a large recovery. But there are many pitfalls and obstacles to proving liability, and there are unique rules and procedures that govern qui tam whistleblower cases. Therefore, it is critical to retain an experienced False Claims Act whistleblower lawyer to maximize your recovery.

=='''Types of False Claims Prohibited by the False Claims Act'''==
The False Claims Act prohibits “(A) knowingly present[ing], or caus[ing] to be presented, a false or fraudulent claim for payment or approval; [and] (B) knowingly mak[ing], us[ing], or caus[ing] to be made or used, a false record or statement material to a false or fraudulent claim.” 31 U.S.C. § 3279(a)(1)(A)–(B).

To prevail, a qui tam whistleblower must prove that:

#the defendant submitted a claim to the government;
#the claim was false; and
#the defendant knew the claim was false.”

==='''Express Legal Falsity (Factually False Claim)'''===

A claim of express falsity arises where a contractor fails to comply with the requirements for the goods or services that it agreed to provide the federal government. A factually false claim is one that “is untrue on its face,” for example if it “include[s] ‘an incorrect description of goods or services provided or a request for reimbursement for goods or services never provided.’” United States v. Kellogg Brown & Root Servs., Inc., 800 F. Supp. 2d 143, 154 (D.D.C. 2011) (citing United States v. Sci. Applications Int’l Corp. (SAIC II), 626 F.3d 1257, 1266 (D.C. Cir.2010)). Examples include billing for services that were never provided or charging the government for an armored vehicle but providing a vehicle that is not armored.

The FCA defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4). Escobar held that to properly plead materiality, a plaintiff must show that the effect or likely behavior of the government—if it knew that the defendant had made false statements in seeking payment—would be to refuse payment. Id. at 2002. “The materiality standard is demanding” because the FCA “is not an all-purpose antifraud statute or a vehicle for punishing garden-variety breaches of contract or regulatory violations.” Id. at 2003

==='''Legal Falsity (False Certification)'''===

A false certification may be either express or implied:

*Express false certification occurs when a claimant explicitly represents that he or she has complied with a statute, regulation, or contractual term, but in fact has not complied.
*Implied false certification occurs when “the defendant submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory, or contractual requirement,” and that “omission renders those representations misleading.” Escobar, 136 S. Ct. at 1995.

A claim of implied certification arises where the claim for payment to the Government implicitly constitutes certification of compliance with certain applicable regulations. A government contractor’s non-compliance with a government regulation can violate the False Claims Act where there is a relevant connection to the contract at issue. In 2016, the Supreme Court held in Escobar that an FCA complaint premised on implied certification must satisfy “two conditions”: “first, the claim . . . makes specific representations about the goods or services provided; and second, the defendant’s failure to disclose non-compliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.”

Escobar also provides important guidance on materiality:

*Materiality turns on the “effect on the likely or actual behavior of the recipient of the alleged misrepresentation.” Universal Health, 136 S. Ct. 1989 at 2002.
*To plead materiality with the requisite particularity, a relator may draw inferences from various sources, including the Government’s history of declining to pay claims for failure to comply with the applicable regulation. See Universal Health, 136 S. Ct. at 2003 (noting that materiality may be premised on “evidence that the defendant knows that the Government consistently refuses to pay claims in the mine run of cases based on noncompliance with the particular statutory, regulatory, or contractual requirement[s]”).
*Materiality is absent at the pleading stage when the relator’s chronology suggests that the Government knew of the alleged fraud, yet paid the contractor anyway. See Universal Health, 136 S. Ct. at 2003-04 (“[I]f the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material. Or, if the Government regularly pays a particular type of claim in full despite actual knowledge that certain requirements were violated, and has signaled no change in position, that is strong evidence that the requirements are not material.”).

The difference between express certification and implied certification is whether the entity seeking payment must certify that it has complied with the applicable law, rule, or regulation each time a claim is made, or if that certification is made initially and later implied with each subsequent claim.

==='''Fraud-In-The-Inducement or Promissory Fraud'''===

The False Claims Act also prohibits fraud-in-the-inducement, i.e., where the contract or extension of government benefit was originally obtained through false statements or fraudulent conduct.

The Supreme Court recognized a fraud-in-the-inducement theory when it held in U.S. ex. rel. Marcus v. Hess, 317 U.S. 537 (1943) that contracts obtained under a collusive bidding scheme violated the FCA by defrauding the government and compelling it to pay more “than it would have been required to pay had there been free competition in the open market.”

To establish fraudulent inducement under the FCA, a relator must show that a false statement, omission, or misrepresentation “`caused’ or `induced’ the government to enter into a contract, such that but for the misrepresentations, the government would not have awarded the contract and would not have paid the claim.” United States ex rel. Thomas v. Siemens AG, 991 F. Supp. 2d 540, 569 (E.D. Pa. 2014).

==='''A Grant Assurance is a Claim'''===

A grant assurance in an application for federal funds or a grant progress report is a “claim” under the False Claims Act since representations made in the progress report trigger the payment of grant funds. See United States ex rel. Bauchwitz v. Holloman, 671 F.Supp.2d 674, 689 (E.D.Pa.2009).

==='''Reverse False Claims Liability'''===

Reverse false claims liability arises where an entity or individual avoids the payment of money due to the government, e.g., failing to pay royalties owed to the government for mining on public lands.

Section 3729(a)(1)(G) creates liability for a person who “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government,” or who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G).

To establish reverse false claim liability, a qui tam relator must show:

#proof that the defendant made a false record or statement
#at a time that the defendant had a presently-existing obligation to the government — a definite and clear obligation to pay money or property at the time of the allegedly false statements.

=='''False Claims Act First-to-File Bar'''==

The first-to-file bar prohibits a whistleblower from bringing suit based on a fraud already disclosed through identified public channels, unless the whistleblower is “an original source of the information.” Pursuant to the first-to-file bar, “[w]hen a person brings an action under [the False Claims Act], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). The first-to-file bar encourages prompt filing.

*Where two complaints allege “all the essential facts” of the underlying fraud, then the first complaint will typically preclude the later complaint, even if the later-in-time complaint incorporates different details.
*Where a second complaint provides additional information that suggests a broader scope of fraud than the initial complaint, the second complaint might be barred where the government knows the essential facts of a fraudulent scheme because it has sufficient information to discover related frauds.
*To bar later-filed qui tam actions, the allegedly first-filed qui tam complaint must not itself be jurisdictionally or otherwise barred, e.g., if the first-filed complaint fails to [https://www.zuckermanlaw.com/sp_faq/heightened-pleading-requirement-false-claims-act-qui-tam-cases/ plead fraud with particularity, as required by Rule 9(b).]
*The Fourth Circuit Court of Appeals recently held that the appropriate reference point for a first-to-file analysis is the set of facts in existence at the time that the FCA action under review is commenced. Facts that may arise after the commencement of a relator’s action, such as the dismissals of earlier-filed, related actions pending at the time the relator brought his or her action, do not factor into this analysis.

=='''Filing a False Claims Act Qui Tam Case Under Seal'''==

The False Claims Act requires that a qui tam action must be filed under seal and remain seal for at least 60 days. This procedure enables the government to investigate the matter, so that it may decide whether to take over the relator’s action or to instead allow the relator to litigate the action in the government’s place. The purpose of the seal provision is to avoid alerting defendants to a pending federal criminal investigation. State Farm Fire and Cas. Co. v. US, 137 S. Ct. 436 (2016).

The “sealing period, in conjunction with the requirement that the government, but not the defendants, be served, was ‘intended to allow the Government an adequate opportunity to fully evaluate the private enforcement suit and determine both if that suit involves matters the Government is already investigating and whether it is in the Government’s interest to intervene and take over the civil action.” United States ex rel. Pilon v. Martin Marietta Corporation, 60 F.3d 995, 998-99 (quoting S. Rep. No. 345, 99th Cong., 2d Sess. 24, reprinted in 1986 U.S.C.C.A.N. 5266, 5289).

'''Failure to file under seal could potentially jeopardize a relator’s ability recover a whistleblower bounty,''' but the False Claims Act does not require automatic dismissal for a seal violation.

[https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ A False Claims Act retaliation claim] can also be filed under seal (in conjunction with a qui tam action).

To initiate a False Claims Act qui tam action, the relator (whistleblower) must serve a copy of the qui tam complaint along with a “written disclosure of substantially all material evidence and information the [relator] possesses” on the Government. 31 U.S.C. § 3730(b)(2). The complaint remains under seal for at least 60 days, and shall not be served on the defendant. During this 60-day period, the Government is charged with investigating the allegations and “may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal.” 31 U.S.C. §§ 3730(b)(2), (3).

Before the 60-day period (or any extensions obtained) expire, the Government shall either “(A) proceed with the action, in which case the action shall be conducted by the Government; or (B) notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.” 31 U.S.C. § 3730(b)(4).

=='''False Claims Act Fraud Violations'''==

Examples of the type of fraud that can qualify for a qui tam whistleblower award or bounty include:

*Paying kickbacks to [https://www.zuckermanlaw.com/sp_faq/violation-anti-kickback-law-also-violation-false-claims-act/ refer patients] for services that will be reimbursed by Medicare
*[https://www.zuckermanlaw.com/sp_faq/false-claims-act-prohibit-fraudulent-inducement-contract/ Fraudulently inducing a contract], i.e., making false representations to induce the government to enter into a contract
*[https://www.zuckermanlaw.com/sp_faq/false-claims-act-prohibit-bid-rigging/ Bid rigging]
*[-practices-give-rise-false-claims-act-liability/ Violating good manufacturing practices]
*Double-billing Medicare
*Defective pricing, including noncompliance with the requirement to submit current, accurate and complete certified cost and pricing data under the Truth in Negotiations Act
*Inaccurate disclosure of pricing information and practices, such as:
**Hewlett-Packard’s $55 million settlement for providing incomplete commercial sales practices information to GSA contracting officers during contract negotiations.
**Informatica LLC’s $21.57 million settlement to resolve allegations that it provided false information concerning its commercial discounting practices for its products and services to resellers, who then used that false information in negotiations with GSA for government-wide contracts.
*Billing Medicaid for unnecessary medical services
*Overbilling for services performed, such as:
**Northrop Grumman’s $27.45 million settlement for overstating the number of labor hours its employees worked on two Air Force contracts by individuals stationed in the Middle East.
*Providing defective products, such as:
**Sapa Profiles Inc.’s $34.6 million settlement to resolve claims that it falsified thousands of certifications after altering the results of tensile tests designed to ensure the consistency and reliability of aluminum.
*Falsifying admission criteria and regularly diagnosing patients with “disuse myopathy,” an invented medical term meaning generalized weakness, in order to qualify for higher levels of reimbursement as an Independent Rehabilitation Facility (IRF).
**Encompass Health paid $48 million to resolve allegations that some of its IRFs provided inaccurate information to Medicare to maintain their status as an IRF and to earn a higher rate of reimbursement and that some admissions to its IRFs were not medically necessary.
*Creating a fraudulent joint venture to secure government contracts that are set aside for businesses that participate in the Service-Disabled Veteran-Owned Small Business program.
**In 2019, A&D General Contracting agreed to pay approximately $3.2 million for fraudulently obtaining over $11 million in government contracts which had been set aside for service-disabled veteran-owned small businesses.
*Violating the federal Anti-Kickback Statute and the FCA by billing millions of dollars for unlawfully forcing patients to endure 72-hour hospital stays for observation and mental illness treatment against their will.
**Pacific Health Corp. paid $16.5 million to settle claims that it doled out kickbacks for referrals of homeless patients and provided them with unnecessary treatments.
*Making improper payments to doctors to get them to write prescriptions for two Teva products.
**In 2020, Teva agreed to pay $54M to settle a qui tam case alleging that it paid doctors speaker fees and pricey to prescribe multiple sclerosis drug Copaxone and Parkinson’s disease drug Azilect.
*Paying doctors and kickbacks or financial incentives to get patient referrals.
**In 2020, Agnesian HealthCare paid $10M to settle a qui tam case alleging that its compensation plan for doctors violated the Stark Law, the Anti-Kickback Statute, the federal False Claims Act and the Wisconsin False Claims by rewarding and offering incentives to its network of affiliated doctors to refer Medicare and Medicaid patients exclusively to Agnesian doctors and facilities.
*Upcoding in the form of billing for 14,000-level tissue transfers, which should have been billed as lower-level wound repairs.
*Making misrepresentations regarding certified cost or pricing data in violation of federal procurement laws and regulations. See 10 U.S.C. 2306a; 41 U.S.C. Chapter 35; FAR 15.403-4 and 15.403-5.

==='''Stark Act Violations or Kickbacks Can Violate the False Claims Act'''===
*Both the Stark Act and the Anti-Kickback Act prohibit a health care provider from submitting claims to Medicare based upon referrals from physicians who have a “financial relationship” with the health care entity, unless a statutory or regulatory exception or safe harbor applies. 42 U.S.C. §§ 1395nn(a)(1); 1320a-7b(b). In particular, the Stark Act prohibits “knowingly and willfully” offering or paying “any remuneration . . . to any person to induce such person . . . to refer an individual to a person for the furnishing . . . of any item or service for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2)(A). And it prohibits “knowingly and willfully solicit[ing] or receiv[ing]” kickbacks “in return” for such conduct. Id. § 1320a-7b(b)(1)(A).
*The Stark Act expressly prohibits Medicare from paying claims that do not satisfy each of its requirements, including every element of any applicable exception. 42 U.S.C. §§1395nn(a)(1), (g)(1).
*“Falsely certifying compliance with the Stark or Anti-Kickback Acts in connection with a claim submitted to a federally funded insurance program is actionable under the FCA.” United States ex rel. Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 95 (3d Cir. 2009) (citing United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 243 (3d Cir. 2004) (other citations omitted)). Typically submission of a claim to Medicare requires the provider to certify compliance with the Anti-Kickback Law on CMS Form 855s, which states in relevant part “I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with [Medicare] laws, regulations, and program instructions (including, but not limited to, the Federal [A]nti-[K]ickback [S]tatute . . . ), and on the supplier’s compliance with all applicable conditions of participation in Medicare.”
*In other words, a claim for payment made pursuant to an illegal kickback is false under the FCA. United States ex rel. Quinn v. Omnicare, Inc., 382 F.3d 432, 439 (3d Cir. 2004).
*A defendant can avoid liability under the Stark Act by demonstrating that either a statutory or regulatory exception (or safe harbor) applies. The safe harbor exceptions recognize that financial arrangements between physicians and health care entities may exist for legitimate reasons independent of referrals.

Note that opposing kickbacks or raising concerns about kickbacks is protected conduct under the False Claims Act anti-retaliation provision. For more information about False Claims Act whistleblower protection, click [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ here.]

For more information about the False Claims Act, Anti-Kickback Statute, Physician Self-Referral Law, and Exclusion Statute, see the HHS OIG’s [https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/ roadmap for physicians about fraud and abuse laws.]

==='''Kickback Whistleblower Need Not Prove “but for” Causation'''===

Recently the Third Circuit rejected a provider’s contention that a kickback is actionable under the FCA only where the relator provides that the kickback actually influenced a patient’s or medical professional’s decision to use a particular provider. In Steve Greenfield v. Medco Health Solutions Inc., the Third Circuit held that a kickback qui tam can be proven by showing that a claim was submitted for reimbursement for medical care that was provided in violation of the Anti-Kickback Statute (as a kickback renders a subsequent claim ineligible for payment). But the court noted that “[a] kickback does not morph into a false claim unless a particular patient is exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient.”

In June 2019, Rialto Capital Management LLC (Rialto) and its former affiliate RL BB-IN KRE LLC (RL BB) agreed to pay $3.6 million to resolve allegations that Rialto and the Kentuckiana Medical Center (KMC), an Indiana-based hospital owned by RL BB, violated the Anti-Kickback Statute, the Stark Law, and the False Claims Act by engaging in illegal financial arrangements with two doctors who referred patients to KMC. According to the DOJ’s press release, “KMC, under the direction of Rialto, provided personal loans to two referring doctors and then repeatedly forbore from requiring repayment of those loans” and “the hospital’s failure to collect on loans to key referral sources constituted a form of remuneration prohibited by both the AKS and the Stark Law.”

==='''Fraudulent Inducement of a Contract and False Claims Act Liability'''===
Where a contract was “procured by fraud,” False Claims Act liability flows from fraudulent inducement. Examples of fraudulent inducement include:

*the contractor knowingly provides the government with price lists and discounts containing false information in order to induce it to enter into the contract;
*the contractor makes an initial misrepresentation about its capability to perform the contract in order to induce the government to enter into the contract; or
*a party makes promises at the time of contracting that it intends to break.

Where a defendant causes a contract to be procured by fraud, all claims for payment made under that contract are deemed false for purposes of the False Claims Act, even if the claims do not themselves contain a false statement. U.S. ex rel. Marcus v. Hess, 63 S. Ct. 379, 384 (1943)(holding the initial act of fraud to induce government contract “tainted” every subsequent claim for payment); see also U.S. ex rel. Main v. Oakland City Univ., 426 F.3d 914, 917 (7th Cir. 2005). The core issue is whether the defendant entered into a government contract with the intent not to perform or with the knowledge that it could not perform as promised.” U.S. ex rel. Blaum v. Triad Isotopes, Inc., 104 F. Supp. 3d 901, 914 (N.D. Ill. 2015).

=='''Materiality and the False Claims Act'''==

The False Claims Act (FCA) defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4). In [https://www.supremecourt.gov/opinions/15pdf/15-7_a074.pdf United States ex rel. Escobar v. Universal Health Servs., Inc.,] the Supreme Court held that FCA liability can attach for violating statutory or regulatory requirements, whether or not those requirements were designated in the statute or regulation as conditions of payment.

In particular, the Escobar Court held that “liability can attach when the defendant submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory or contractual requirement. In these circumstances, liability may attach if the omission renders those representations misleading.” 136 S. Ct. 1989, 1995 (2016). The Court articulated the following factors governing the materiality analysis, with no one factor being necessarily dispositive:

*whether compliance with a statute is a condition of payment;
*whether the violation goes to “the essence of the bargain” or is “minor or insubstantial”;
*whether the government consistently pays or refuses to pay claims when it has knowledge of similar violations; and
*whether the government would likely refuse payment had it known of the regulatory violations.

As Escobar addresses only an implied certification theory, Escobar’s materiality requirement should not extend to all types of FCA claims. For example, an express misrepresentation, e.g., a health insurer expressly agreeing to comply with Medicare rules and regulations when it does not, would violate the FCA. See, e.g., U.S. ex rel. McCarthy v. Marathon Techs., Inc., No. 11 C 7071, 2014 WL 4924445 (N.D. Ill. Sept. 30, 2014).

==='''Examples of Material False Claims'''===
Examples of material false claims include:

*A drug company Seeking and obtaining payment for off-label uses of certain drugs. See U.S. ex rel. Brown v. Celgene Corp., 226 F. Supp. 3d 1032 (C.D. Cal. 2016).
*A private security company submitting false weapons qualifications for the services of protective services personnel who had not fulfilled the required weapons training. United States ex rel. Beauchamp v. Academi Training Center, Inc., 220 F. Supp. 3d 676 (E.D. Va. 2016).
*Submitting a false hospice certification. See, e.g., Druding v. Care Alternatives, Inc., 164 F. Supp. 3d 621, 629 (D.N.J. 2016); United States ex rel. Fowler v. Evercare Hospice, Inc., No. 11-CV-00642-PAB-NYW, 2015 WL 5568614, at *7 (D. Colo. Sept. 21, 2015) (“the requirement that physicians’ certifications are accompanied by clinical information and other documentation that support a patient’s prognosis is a condition of payment under applicable Medicare statutes and regulations.”); see also, e.g., United States ex rel. Hinkle v. Caris Healthcare, L.P., No. 3:14-CV-212-TAV-HBG, 2017 WL 3670652, at *9 (E.D. Tenn. May 30, 2017) (“the government’s complaint alleges that defendants’ written certifications were false, in that the documentation for certain patients did not support a prognosis of terminal illness.”).

The federal government’s payment of a claim after it learns of untruthful certifications or attestations about compliance with regulatory or contractual duties is not a shield from liability. See Campie v. Gilead Sciences, Inc., 862 F.3d 890, 906 (9th Cir. 2017).

=='''False Claims Act Statute of Limitations'''==

The statute of limitations for a qui tam action is the longer of 1) six years from when the fraud is committed; or 2) three years after the United States knows or should know about the material facts, but not more than 10 years after the violation. In Cochise Consultancy Inc. v. United States, ex rel. Hunt, the Supreme Court held that both Government-initiated suits under § 3730(a) and relator-initiated suits (qui tam actions) under § 3730(b) are civil actions under section 3730 and therefore the longer limitations period applies in non-intervened qui tam actions.

The statute of limitations for a False Claims Act whistleblower retaliation case is three years.

=='''False Claims Act Authorizes Treble Damages'''==

The False Claims Act provides that any entity violating 31 U.S.C. § 3729(a)(1) is liable for three times the amount of damages which the Government sustains because of the fraud.

=='''Pleading Qui Tam False Claims Act Case in Detail'''==

False Claims Act qui tam actions must meet the heightened pleading requirement set forth in Federal Rule of Civil Procedure 9(b). In other words, a qui tam relator must “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The complaint must “identify ‘the who, what, when, where, and how of the misconduct charged,’ as well as ‘what is false or misleading about [the purportedly fraudulent] statement, and why it is false.’” Cafasso ex rel. United States v. General Dynamics C4 Systems, Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)

Note though that in the Ninth Circuit, the relator need not “identify representative examples of false claims to support every allegation.” Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010). Similarly, in the Eleventh Circuit, there is no requirement for a qui tam relator to provide exact billing data. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1312 & n.21 (11th Cir. 2002). Rather, a complaint must contain “some indicia of reliability” that a false claim was actually submitted. Clausen, 290 F.3d at 1311. “For instance, a relator with first-hand knowledge of the defendant’s billing practices may possess a sufficient basis for alleging that the defendant submitted false claims.” United States ex rel Patel v. GE Healthcare, Inc., No. 8:14-cv-120-T-33TGW, 2017 WL 4310263, at *6 (M.D. Fla. Sept. 28, 2017).

“An FCA claimant is not required to show `the exact content of the false claims in question’ to survive a motion to dismiss, as `requiring this sort of detail at the pleading stage would be one small step shy of requiring production of actual documentation with the complaint, a level of proof not demanded to win at trial and significantly more than any federal pleading rule contemplates.'” United States v. Executive Health Resources, Inc., 196 F.Supp.3d 477, 492 (E.D.Pa. 2016) (citing Foglia, 754 F.3d at 156); Gohil, 96 F.Supp.3d at 519 (“[A relator] is not required to plead the details of any false claim submitted for payment[.]”)

But it is critical to connect the fraud scheme to the submission of false claims. In United States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52, 58 (1st Cir. 2017), the First Circuit held that “aggregate [information] reflecting the amount of money expended by Medicaid” on off-label prescriptions was “insufficient on its own to support a[] [False Claims Act] claim” because it did not show “an actual false claim made to the [G]overnment.”

To satisfy Rule 9(b), the whistleblower “must provide ‘particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted’”; “[d]escribing a mere opportunity for fraud will not suffice.” See Foglia v. Renal Ventures Mgmt., 754 F.3d 153, 157-58 (3d Cir. 2014).

As summarized in United States of America ex rel. Donna Rauch v. Oaktree Medical Centre, P.C., No. 6:15-cv-01589 (D.SC March 5, 2020), the Fourth Circuit applies the following Rule 9(b) standard:

“To satisfy Rule 9(b), a plaintiff asserting a claim under the [FCA] `must, at a minimum, describe the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.'” Nathan, 707 F.3d at 455-56 (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008)). The Fourth Circuit has held that “allegations of a fraudulent scheme, in the absence of an assertion that a specific false claim was presented to the government for payment” are insufficient to meet Rule 9(b)’s heightened pleading standard. Id. at 456. “Instead, the critical question is whether the defendant caused a false claim to be presented to the government, because liability under the [FCA] attaches only to a claim actually presented to the government for payment, not the underlying fraudulent scheme.” Id. (citing Harrison, 176 F.3d at 785). In the event a relator does not plead with particularity that specific false claims actually were presented to the government for payment, a relator’s complaint may still survive a Rule 9(b) challenge only if it “allege[s] a pattern of conduct that would `necessarily have led[ ] to submission of false claims’ to the government for payment.” Grant, 912 F.3d at 197 (quoting Nathan, 707 F.3d at 457) (alteration and emphasis in original).

A good example of meeting the Rule 9(b) requirement without pleading actual submission of invoices to the government is United States ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc., 906 F. Supp. 2d 1264, 1269 (N.D. Ga. 2012), a case in which the relator worked for a dialysis service provider and managed the facility’s inventory of two drugs. Based upon the relator’s observations of the inventory, he believed the facility submitted “fraudulent reimbursement claims” by “bill[ing] the government for doses of [drugs] that it received for free.” Id. Although the relator did not work in the billing department, the court found the relator satisfied Rule 9(b) because his belief was based upon his observation of the facility’s inventory documents and a conversation with “his clinical manager inform[ing] him that those documents were used as the basis upon which [the facility] billed for reimbursement.” Id. at 1277.

=='''Elements of a False Claims Act Qui Tam Case'''==

A qui tam relator must plead:

#a false statement or fraudulent course of conduct;
#made with scienter (intent);
#that was material;
#causing the government to pay out money or forfeit moneys due.

==='''False Claims Act Public Disclosure Bar'''===

The public disclosure bar prohibits a relator from bringing a False Claims Act lawsuit based on a fraud that has already been disclosed through certain public channels, unless the relator is an “original source” of the information. 31 U.S.C. § 3730(e)(4)(A). An original source is “an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing [suit].” § 3730(e)(4)(B).

The public disclosure bar asks whether the relator’s allegations are “substantially similar” to publicly available information. United States ex rel. Davis v. District of Columbia, 679 F.3d 832, 836 (D.C. Cir. 2012). “Where a public disclosure has occurred, [the government] is already in a position to vindicate society’s interests, and a qui tam action would serve no purpose.” United States ex rel. Feingold v. AdminaStar Federal, Inc., 324 F.3d 492, 495 (7th Cir. 2003).

But the public disclosure bar does not dictate that a relator must “possess direct and independent knowledge of all of the vital ingredients to a fraudulent transaction.” United States ex rel. Springfield Terminal Railway Co. v. Quinn, 14 F.3d 645, 656 (D.C. Cir. 1994). Rather, “direct and independent knowledge of any essential element of the underlying fraud transaction” is sufficient to give the relator original-source status under the Act. Id. at 657.

In Springfield Terminal, the D.C. Circuit set forth specific criteria to evaluate whether the public disclosures bars a qui tam action:

#The government has “enough information to investigate the case” either when the allegation of fraud itself has been publicly disclosed, or when both of its underlying factual elements—the misrepresentation and the truth of the matter—are already in the public domain.

#“[I]f X + Y = Z, Z represents the allegation of fraud and X and Y represent its essential elements. In order to disclose the fraudulent transaction publicly, the combination of X and Y must be revealed, from which readers or listeners may infer Z, i.e., the conclusion that fraud has been committed.” Id. at 654. Because the publicly disclosed pay vouchers reflected only the false statement (the arbitrator’s claim for payment) and not the true facts (the services actually rendered), we held that the public disclosure bar did not apply. Id. at 655-56. That said, we stressed that a qui tam action cannot be sustained where both elements of the fraudulent transaction—X and Y—are already public, even if the relator “comes forward with additional evidence incriminating the defendant.”

A September 2018 Third Circuit decision in Pharamerica clarifies that the FCA’s public disclosure bar is not triggered when a relator relies upon non-public information to make sense of publicly available information, where the public information — standing alone — could not have reasonably or plausibly supported an inference that the fraud was in fact occurring. Similarly, the D.C. Circuit has held that the public disclosure bar is not triggered where the relator “supplied the missing link between the public information and the alleged fraud” by “rel[ying] on nonpublic information to interpret each [publicly disclosed] contract,” and where “[w]ithout [relator’s] nonpublic sources . . . there was insufficient [public] information to conclude” that the defendant actually engaged in the alleged fraud. United States ex rel. Shea v. Cellco P’ship, 863 F.3d 923, 935 (D.C. Cir. 2017).

=='''Scienter Under the FCA Does Not Require Proof of Specific Intent'''==

An ordinary breach of a government contract caused by an honest mistake ordinarily does not give rise to False Claims Act liability. To prevail in a qui tam action, a relator must prove the defendant acted knowingly, i.e., that the defendant “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b). But proof of specific intent to defraud is not required. Therefore, a person who acts in deliberate ignorance or reckless disregard of a false or fraudulent claim can be liable under the False Claims Act.

As amended by the Fraud Enforcement and Recovery Act of 2009, a person is liable under the False Claims Act if he “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” '''There is no requirement to prove that a false statement was made with the intent that it would result in the federal government paying the claim.'''

=='''False Claims Act Qui Tam Relators Need Not Demonstrate Intent'''==

The Department of Justice takes the position that qui tam relators need not prove intent. In a Statement of Interest filed on September 19, 2017 in United States ex rel. Daniel Hamilton, Plaintiff, v. Yavapai Community College District, et al., CV-12-08193-PCT-GMS, the Department argued:

'''Despite defendants’ endorsement of an intent requirement, no such requirement exists.''' Instead, the FCA provides an action for “knowing” violations and defines “the terms ‘knowing’ and ‘knowingly’ [to] mean that a person, with respect to information has actual knowledge of this information; acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless disregard of the truth or falsity of the information; and require no proof of specific intent to defraud[.]” 31 U.S.C. § 3729(b)(1) (emphasis added). This is made clear not only by the FCA itself, but also by several Ninth Circuit cases. See Hooper v. Lockheed Martin Corp., 688 F.3d 1037, 1049 (9th Cir. 2012) (district court applied the wrong standard in requiring relator to show defendant acted with “the intent to deceive”); see also U.S. v. Bourseau, 531 F.3d 1159, 1167 (9th Cir. 2008); U.S. ex rel. Plumbers and Steamfitters Local Union No. 38 v. C.W. Roen Const. Co., 183 F.3d 1088, 1092-93 (9th Cir. 1999); U.S. ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991).

=='''The False Claims Act Protects Whistleblowers from Retaliation'''==

The False Claims Act (“FCA”) protects employees, contractors, and agents who engage in protected activity from retaliation in the form of their being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.” 31 U.S.C. § 3730(h)(1).

False Claims Act whistleblower protection extends not only to employees and contractors, but also to partners. See U.S. ex rel. Kraemer v. United Dairies, L.L.P., 2019 WL 2233053 (D. Minn. May 23, 2019); Munson Hardisty, LLC v. Legacy Point Apartments, LLC, 359 F. Supp. 3d 546, 558 (E.D. Tenn. 2019) (LLC that was general contractor on defendant’s construction project was proper FCA plaintiff). In addition, the False Claims Act whistleblower protection law extends to physicians with staff privileges at a hospital. Powers v. Peoples Cmty. Hosp. Auth., 455 N.W.2d 371, 374 (Mich. Ct. App. 1990); [https://scholar.google.com/scholar_case?case=7152881440929489314&hl=en&as_sdt=20000006 El-Khalil v. Oakwood Healthcare], Inc., No. 19-12822, E.D. Mich. April 20, 2020.

==='''Prohibited Acts of Retaliation by the False Claims Act Anti-Retaliation Provision'''===

The False Claims Act prohibits an employer from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower. Prohibited retaliation includes:

*oral or written reprimands;
*reassignment of duties;
*constructive discharge; and
*retaliatory lawsuits against whistleblowers.

==='''Remedies or Damages Under the Anti-Retaliation Provision of FCA'''===

A whistleblower who prevails in a False Claims Act retaliation action under the FCA may recover:

*reinstatement;
*double back pay, plus interest;
*special damages, which include litigation costs, reasonable attorney’s fees, emotional distress, and other noneconomic harm from the retaliation. 31 U.S.C. § 3730(h)(2).

Recently, a jury awarded more than $2.5 million to a whistleblower in an FCA retaliation case. As there is no cap on compensatory damages, FCA retaliation plaintiffs can potentially recover substantial damages for the retaliation that they have suffered.

And in 2020, two cardiologists formerly employed by Tenet Healthcare Corporation recovered $11 million in compensatory damages in an arbitration of claims of FCA retaliation, tortious interference with business expectancies, false light, and breach of contract.

==='''Protected Whistleblowing or Protected Conduct under the FCA Retaliation Law'''===

The FCA protects:

#lawful acts . . . in furtherance of an action under [the FCA]”; and
#“other efforts to stop 1 or more [FCA] violations.” 31 U.S.C. § 3730(h)(1).

Recent cases have interpreted this protected activity to include:

*internal reporting of fraudulent activity to a supervisor;
*steps taken in furtherance of a potential or actual qui tam action; or
*efforts to remedy fraudulent activity or to stop an FCA violation.

FCA whistleblower protection attaches regardless of whether the whistleblower mentions the words “fraud” or “illegal.” The employer need only be put on notice that litigation is a “reasonable possibility.” A reasonableness standard is inherently flexible and dependent on the circumstances; thus, “no magic words—such as illegal or unlawful—are necessary to place the employer on notice of protected activity.” Jamison v. Fluor Fed. Sols., LLC, 2017 WL 3215289, at *9 (N.D. Tex. July 28, 2017).

An FCA retaliation claim does not require proof of a viable underlying FCA claim. The FCA anti-retaliation provisions “do[] not require the plaintiff to have developed a winning qui tam action”; they “only require [] that the plaintiff engage in acts [made] in furtherance of an [FCA] action.” Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 187 (3d Cir. 2001).

And because the Supreme Court has held that the FCA “is intended to reach all types of fraud, without qualification, that might result in financial loss to the Government” and “reaches beyond ‘claims’ which might be legally enforced, to all fraudulent attempts to cause the Government to pay out sums of money,” the term “false or fraudulent claim” should be construed broadly. U.S. ex rel. Drescher v. Highmark, Inc., 305 F. Supp. 2d 451, 457 (E.D. Pa. 2004).

==='''FCA Anti-Retaliation Law Protects Efforts to Stop a Government Contractor from Defrauding the Government'''===

The FCA anti-retaliation law protects whistleblowers who try to prevent one or more violations of the FCA, as long as they have an objectively reasonable belief that their employer is violating, or will soon violate, the FCA. Case law has clarified that efforts to stop an FCA violation are protected even if they are not meant to further a qui tam claim. For example, [https://www.zuckermanlaw.com/false-claims-act-whistleblower-provision-protects-refusal-violate-false-claims-act/ refusing to falsify documentation that will be submitted to Medicare is protected.]

Similarly, a South Carolina district judge held that a relator engaged in protected conduct when she refused her employer’s directive to obtain patient signatures and back-date the signatures, which the relator perceived as an attempt to create fraudulent forms used to secure reimbursement from US health insurance programs.

The second prong (“other efforts to stop FCA violation”) is subject to an “objective reasonableness” standard, which requires only that an employee’s actions be “motivated by an objectively reasonable belief that the employer is violating, or soon will violate, the FCA.” United States ex rel. Grant v. United Airlines Inc., 912 F.3d 190, 200 (4th Cir. 2018).

===''' FCA Whistleblower Protection Not Limited to Disclosures About the Whistleblower’s Employer'''===

As the Fourth Circuit held in O’Hara v. Nika Technologies, Inc., 2017— F.3d —-2017 WL 6542675 (4th Cir. Dec. 22, 2017), an FCA retaliation plaintiff need not demonstrate their protected disclosure concerns fraud committed by their employer:

The plain language of § 3730(h) reveals that the statute does not condition protection on the employment relationship between a whistleblower and the subject of his disclosures. Section 3730(h) protects a whistleblower from retaliation for “lawful acts done … in furtherance of an action under this section.” 31U.S.C. § 3730(h)(1). The phrase “an action under this section” refers to a lawsuit under §3730(b), which in turn states that “[a] person may bring a civil action for a violation of [the FCA].” Id. § 3730(b)(1). Therefore, § 3730(h) protects lawful acts in furtherance of an FCA action. This language indicates that protection under the statute depends on the type of conduct that the whistleblower discloses— i.e., a violation of the FCA—rather than the whistleblower’s relationship to the subject of his disclosures.

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== '''Welcome to the Whistleblower Wiki''' ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== '''SEC Whistleblower Program''' ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program]''' ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

=='''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]'''==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program]''' ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program]''' ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

== '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws]''' ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

== '''Welcome to the Whistleblower Wiki''' ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== SEC Whistleblower Program ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program] ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

==[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program] ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program] ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws] ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

== '''Welcome to the Whistleblower Wiki''' ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== SEC Whistleblower Program ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program] ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

==[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program] ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program] ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws] ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

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Admin: /* Whistleblower Protection Laws */

== Welcome to the Whistleblower Wiki ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== SEC Whistleblower Program ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program] ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

==[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://web.archive.org/web/20220705180208/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== [https://web.archive.org/web/20220705185137/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program] ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://web.archive.org/web/20220313073150/https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program] ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws] ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

MediaWiki:Mainpage

2025-02-13T23:36:46Z

Admin: /* Anti-Money Laundering Whistleblower Program */

== Welcome to the Whistleblower Wiki ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== SEC Whistleblower Program ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program] ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

==[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://web.archive.org/web/20220705180208/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== [https://web.archive.org/web/20220705185137/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program] ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://web.archive.org/web/20220313073150/https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program] ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

== [https://web.archive.org/web/20220705190406/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws] ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

MediaWiki:Mainpage

2025-02-13T23:24:37Z

Admin: /* Anti-Money Laundering Whistleblower Program */

== Welcome to the Whistleblower Wiki ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== SEC Whistleblower Program ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program] ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

==[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://web.archive.org/web/20220705180208/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== [https://web.archive.org/web/20220705185137/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program] ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://web.archive.org/web/20220313073150/https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== [https://web.archive.org/web/20220705184714/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program] ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

== [https://web.archive.org/web/20220705190406/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws] ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

MediaWiki:Mainpage

2025-02-13T23:24:10Z

Admin: /* Whistleblower Protection Laws */

== Welcome to the Whistleblower Wiki ==

'''Zuckerman Law’s Whistleblower Law Wiki''' provides an overview of the major laws providing rewards or incentives for whistleblowing and laws that protect whistleblowers against retaliation. The wiki includes links to key statutes, regulations, legislative history, articles, and other sources of information.

Zuckerman Law maintains this resource to help inform whistleblowers about their rights and navigate the complex weave of federal and state whistleblower laws. Matt Stock and Jason Zuckerman encourage readers to inform them of any errors or suggested updates.

'''Information on this wiki is provided for informational purposes only and should not be construed as or relied upon as legal advice. This wiki may be deemed attorney advertising. If you are seeking advice concerning a [https://www.zuckermanlaw.com/sp_faq/what-is-a-whistleblower-reward/ whistleblower reward] or [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation] matter, contact [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced counsel]. [https://www.zuckermanlaw.com/attorneys-profile/matthew-stock-cpa/ Matt Stock] and [https://www.zuckermanlaw.com/attorneys-profile/jason-zuckerman/ Jason Zuckerman] are responsible for the content on this wiki.'''

== SEC Whistleblower Program ==

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Overview Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Awards_History%3A_SEC_Whistleblower_Program_A_Success Awards History: SEC Whistleblower Program A Success]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#SEC_Office_of_the_Whistleblower SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Securities_Law_Violations_that_Qualify_for_an_SEC_Whistleblower_Award Securities Law Violations that Qualify for an SEC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Lessons_Learned_from_SEC_Whistleblower_Award_Determinations Lessons Learned from SEC Whistleblower Award Determinations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Prevailing_in_a_Retaliation_Whistleblower_Case_With_Prior_Performance_Problems Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Submitting_a_Tip_Anonymously_to_the_SEC_Office_of_the_Whistleblower Submitting a Tip Anonymously to the SEC Office of the Whistleblower]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#10-Step_Summary_of_the_SEC_Whistleblower_Process 10-Step Summary of the SEC Whistleblower Process]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Employment_Protections_Available_for_SEC_Whistleblowers Employment Protections Available for SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#Largest_SEC_Whistleblower_Awards Largest SEC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/SEC_Whistleblower_Program#International_Schemes_and_SEC_Enforcement_Actions International Schemes and SEC Enforcement Actions]

== [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program CFTC Whistleblower Program] ==

The '''CFTC Whistleblower Reward Program''' [https://www.natlawreview.com/article/cftc-whistleblower-program-annual-report-reveals-active-year-and-success-enlisting provides whistleblowers with a strong monetary incentive], as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, [https://www.zuckermanlaw.com/rewards-and-bounties-for-whistleblowers/market-manipulation-whistleblower-lawyers/ market manipulation schemes], and spoofing. Whistleblower tips to CFTC have helped [https://www.zuckermanlaw.com/cftc_whistleblower_rewards_attorneys/ drive record-level enforcement activity.]

Since 2014, the CFTC has issued more than [https://www.whistleblower.gov/ $120 million in awards] to whistleblowers. The [https://www.zuckermanlaw.com/sp_faq/largest-cftc-whistleblower-awards/ largest CFTC whistleblower awards] to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

'''Contents:'''

# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program Overview]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Violations_that_Qualify_for_a_CFTC_Whistleblower_Award Violations that Qualify for a CFTC Whistleblower Award]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Whistleblowers_Will_Continue_to_Drive_Increased_CFTC_Enforcement_Activity Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Anonymous_Whistleblowing_to_the_CFTC Anonymous Whistleblowing to the CFTC]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Whistleblower_Awards CFTC Whistleblower Awards]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#Protections_Against_Whistleblower_Retaliation Protections Against Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/CFTC_Whistleblower_Program#CFTC_Prohibits_.E2.80.9CGag_Clauses.E2.80.9D_in_Confidentiality_and_Employment_Agreements CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements]

==[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act False Claims Act]==

The [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act] authorizes whistleblowers, also known as qui tam “relators,” to bring suits on behalf of the United States against the false claimant and obtain a portion of the recovery, otherwise known as a relator share. The phrase “qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “who [qui] sues in this matter for the king as well as [tam] for himself.” U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 368 (7th Cir. 2016).

The False Claims Act also [https://www.zuckermanlaw.com/false-claims-act-whistleblower-retaliation-lawyer/ protects whistleblowers from retaliation.]

The [https://www.zuckermanlaw.com/sp_faq/qui-tam-lawsuit/ qui tam provisions of the False Claims Act] have been enormously effective in enlisting private citizens to combat fraud against the government. Qui tam whistleblowers, also known as relators, have enabled the government to recover more than '''$60 billion.'''In fiscal year 2017 alone, qui tam actions brought by whistleblowers resulted in '''$3.4 billion in settlements''' and judgments, and the government paid '''$392 million in whistleblower awards''' to False Claims Act whistleblowers.

'''Contents:'''
# [https://web.archive.org/web/20220705180208/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Types_of_False_Claims_Prohibited_by_the_False_Claims_Act Types of False Claims Prohibited by the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_First-to-File_Bar False Claims Act First-to-File Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Filing_a_False_Claims_Act_Qui_Tam_Case_Under_Seal Filing a False Claims Act Qui Tam Case Under Seal]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Fraud_Violations False Claims Act Fraud Violations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Materiality_and_the_False_Claims_Act Materiality and the False Claims Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Statute_of_Limitations False Claims Act Statute of Limitations]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Authorizes_Treble_Damages False Claims Act Authorizes Treble Damages]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Pleading_Qui_Tam_False_Claims_Act_Case_in_Detail Pleading Qui Tam False Claims Act Case in Detail]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#False_Claims_Act_Public_Disclosure_Bar False Claims Act Public Disclosure Bar]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#Scienter_Under_the_FCA_Does_Not_Require_Proof_of_Specific_Intent Scienter Under the FCA Does Not Require Proof of Specific Intent]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_Claims_Act#The_False_Claims_Act_Protects_Whistleblowers_from_Retaliation The False Claims Act Protects Whistleblowers from Retaliation]

== [https://web.archive.org/web/20220705185137/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/IRS_Whistleblower_Reward_Program IRS Whistleblower Reward Program] ==

The IRS estimates that the United States loses more than [https://www.irs.gov/pub/irs-soi/p1415.pdf $450 billion] per year to tax evasion. To combat tax fraud, Congress enacted legislation providing robust incentives for whistleblowers to report tax fraud. Under [https://web.archive.org/web/20220313073150/https://zuckermanlaw.com/wp-content/uploads/2020/06/26-USC-%C2%A7-7623.pdf 26 USC § 7623(b)], the IRS is '''required to issue an award to tax whistleblowers of 15% to 30%''' of proceeds collected from tax fraud or tax underpayments if:

* the whistleblower provides a tip that the '''IRS decides to take action''' on (a whistleblower cannot force the IRS to act on a tip);
* the amount in dispute (the tax underpayment, including interest and penalties) ''exceeds $2 million''' (if the taxpayer is an individual, his or her gross income must exceed $200,000 for at least one of the tax years in question); and
* the '''IRS collects tax underpayments''' resulting from the action (including any related actions).

In enacting the IRS whistleblower bounty legislation, Congress provided mandatory awards to tax whistleblowers for high-quality tips. Section 7623(b) suggests a focus on '''large-scale tax fraud''' in that Congress removed the previous cap of $10 million on IRS whistleblower awards. Thus, if a whistleblower meets the requirements above, the whistleblower may be able to receive a substantial payout.

On July 2, 2019, the Taxpayer First Act was signed into law. The law provides tax whistleblowers, among other things, [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ significant protections against retaliation]. Read more about the tax whistleblower protection law [https://www.zuckermanlaw.com/irs-tax-fraud-whistleblower-protection-law/ here].

== [https://web.archive.org/web/20220705184714/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-Money_Laundering_Whistleblower_Program Anti-Money Laundering Whistleblower Program] ==

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the [https://www.zuckermanlaw.com/top-reasons-why-sec-whistleblower-program-successful/ success of whistleblower incentives in combatting fraud] against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

#REDIRECT [[Main_Page]]

== [https://web.archive.org/web/20220705190406/https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Whistleblower Protection Laws] ==

'''The Dodd-Frank Act, which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations.''' Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

'''Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX”).''' The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

'''Contents:'''
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Differences_between_SOX_and_Dodd-Frank_Acts Differences between SOX and Dodd-Frank Acts]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Section_1985_Haddle_Remedy_for_Conspiracy_to_Interfere_with_Civil_Rights_of_SEC_Whistleblowers Section 1985 Haddle Remedy for Conspiracy to Interfere with Civil Rights of SEC Whistleblowers]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#RICO_Prohibition_Against_SEC_Whistleblower_Retaliation RICO Prohibition Against SEC Whistleblower Retaliation]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Retaliation_Can_Give_Rise_to_Breach_of_Contract_Claim Whistleblower Retaliation Can Give Rise to Breach of Contract Claim]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Defense_Contractor_Whistleblower_Protection_Act Defense Contractor Whistleblower Protection Act]
#[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Taxpayer_First_Act Taxpayer First Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Whistleblower_Protection_Act Whistleblower Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Energy_Reorganization_Act Energy Reorganization Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Wendell_H._Ford_Aviation_Investment_and_Reform_Act_for_the_21st_Century Wendell H. Ford Aviation Investment and Reform Act for the 21st Century]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Surface_Transportation_Assistance_Act Surface Transportation Assistance Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Financial_Protection_Act Consumer Financial Protection Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Federal_Railroad_Safety_Act Federal Railroad Safety Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#National_Transit_Systems_Security_Act National Transit Systems Security Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Consumer_Product_Safety_Improvement_Act Consumer Product Safety Improvement Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Food_Safety_Modernizations_Act Food Safety Modernizations Act]
# [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Criminal_Antitrust_Anti-Retaliation_Act Criminal Antitrust Anti-Retaliation Act]

== '''Did you know ...''' ==
*Whistleblower awards range from '''between 10% and 30% of the money collected''' when the sanctions exceed $1 million.
*The SEC Whistleblower Program allows a whistleblower to '''submit a tip anonymously''' to the SEC if represented by an attorney.
*75% of SEC whistleblower award recipients in FY 2021 raised their concerns internally to supervisors, compliance personnel, or through internal reporting channels before reporting to the SEC. Most whistleblowers can report directly to the SEC. Compliance personnel, internal auditors, and company officers must meet certain requirements before reporting to the SEC.
*Since the inception of the SEC Whistleblower Program, the SEC has received more than '''52,400 whistleblower tips''' and awarded approximately '''$1.2 billion to 233 individuals.'''
*Providing information to the SEC in an ongoing investigation can qualify for an award. Of the whistleblowers who received awards in FY 2021, approximately 56% provided [https://www.zuckermanlaw.com/sp_faq/original-information-eligible-award-sec-whistleblower-program/ original information] that caused staff to open an investigation or examination, and approximately 44% received awards because their original information significantly contributed to an already existing investigation or examination.
*A whistleblower can qualify for an award without being a current or former company insider. Whistleblowers can obtains awards for providing independent analysis of public information.
*From FY 2012 to FY 2021, the number of whistleblower tips submitted to the SEC has grown by approximately 300%.
*The '''SEC stands firm against so-called "gag clauses"''' in confidentiality, severance, and other employment-related agreements. This type of prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers. But whistleblowers should not disclose privileged information and should seek advice about lawful means of gathering evidence.
*In FY 2021, the most common violations reported by SOX whistleblowers were Manipulation (25%), Corporate Disclosures and Financials (16%), Offering Fraud (16%), Trading and Pricing (6%), and Initial Coin Offerings and Cryptocurrencies (6%).
*In FY 2021, SEC received tips from individuals in 99 foreign countries, as well as from every state in the United States and the District of Columbia. And approximately 20% of the whistleblowers that received awards in FY 2021 were based outside of the United States.

CFTC Whistleblower Program

2025-02-13T23:02:25Z

Admin: /* Private Right of Action under Section 23(h)(1)(A) of the Commodity Exchange Act */

=='''Overview'''==

'''The CFTC Whistleblower Reward Program provides whistleblowers with a strong monetary incentive, as well as anti-retaliation protections, for reporting wrongdoing to the CFTC.''' This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, market manipulation schemes and spoofing. Whistleblower tips to CFTC have helped drive record-level enforcement activity.

Since 2014, the CFTC has issued more than $120 million in awards to whistleblowers. The largest CFTC whistleblower awards to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

Under the CFTC Whistleblower Reward Program, the CFTC will issue rewards to whistleblowers who provide original information that leads to CFTC enforcement actions with total civil penalties in excess of $1 million (see [https://www.cftc.gov/PressRoom/PressReleases/8165-20 how the CFTC calculates monetary sanctions]). A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

Original information “leads to” a successful enforcement action if either:

#The original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or
#The conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.

In determining a reward percentage, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake.

Whistleblowers may still be eligible for a reward under the CFTC Whistleblower Reward Program even if they have already received a reward under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Reward Program.]

=='''Violations that Qualify for a CFTC Whistleblower Award'''==

The largest CFTC whistleblower awards to date are $200 million, $45 million, and $30 million. The main types of violations that may qualify for a CFTC whistleblower award include spoofing, corrupt practices, trading on material nonpublic information, and benchmark rates manipulation.

==='''Spoofing'''===
Spoofing is a form of market manipulation where traders artificially inflate the supply and demand of an asset to increase profits. Traders engaged in spoofing typically place a large number of orders to buy or sell a certain stock or asset without the intent to follow through on the orders. This deceptive trading practice leads other market participants to wrongly believe that there is pressure to act on that asset and “spoofs” other participants to place orders at artificially altered prices.

Spoofing affects prices because the artificial increase in activity on either the buy or sell side of an asset creates the perception that there is a shift in the number of investors wanting to buy or sell. Spoofers place false bids or offers with the intent to cancel before executing so that they can then follow-through on genuine orders at a more favorable price. Often, spoofers use automated trading and algorithms to achieve their goals. According to a CFTC alert on spoofing related to CEA violations, the CFTC is concerned with conduct such as:

*manual and automated trading schemes that place and quickly cancel bids and offers in futures contracts in order to benefit other orders and/or positions;
*orders being quickly placed and canceled at or near the best bid or offer, especially if opposite-side orders are filled;
*multiple orders of the same size repeatedly and simultaneously being placed and canceled; and
*any scheme designed to cause prices to artificially move.

Examples of CFTC spoofing enforcement actions include:

*In November 2019, the CFTC imposed '''[https://www.cftc.gov/PressRoom/PressReleases/8074-19 $67.4 million in sanctions against Tower Research Capital LLC]''', a proprietary trading firm, arising from a manipulative and deceptive scheme. On thousands of occasions, three former Tower traders, placed orders to buy or sell futures contracts with the intent to cancel those orders prior to execution. The traders often used an order splitter to enter several smaller, randomly-sized orders in an attempt to obscure their scheme from other market participants. According to a CFTC press release, “[t]he traders engaged in this scheme to induce other market participants to trade against their genuine orders—by intentionally sending a false signal to the market that they wanted to buy or sell the number of contracts specified in the spoof orders and creating a false impression of supply or demand—so that the genuine orders would fill sooner, at better prices, or in larger quantities than they otherwise would.”
*In August 2021, a federal jury convicted Edward Bases and John Pacilio, two former Merrill Lynch traders, for engaging in a multi-year fraud scheme to manipulate the precious metals market. According to a press release announcing the action, the two traders fraudulently pushed market prices up or down by routinely placing large “spoof” orders in the precious metals futures markets that they did not intend to fill. After manipulating the market, Bases and Pacilio executed trades at favorable prices for their own gain, and to the detriment of other traders. The DOJ’s indictment detailed how Bases and Pacilio discussed their intent to “push” the market through spoofing in electronic chat conversations.
*In September 2020, JPMorgan Chase & Co. agreed to pay disgorgement of $920 million in parallel actions brought by the CFTC, DOJ, and the SEC engaging in manipulative trading of U.S. Treasury securities. According to the SEC’s order, certain traders on J.P. Morgan Securities’ Treasuries trading desk placed genuine orders to buy or sell a particular Treasury security, while nearly simultaneously placing spoofing orders, which the traders did not intend to execute, for the same series of Treasury security on the opposite side of the market. The spoofing orders were intended to create a false appearance of buy or sell interest, which would induce other market participants to trade against the genuine orders at prices that were more favorable to J.P. Morgan Securities than J.P. Morgan Securities otherwise would have been able to obtain.

=== '''Corrupt Practices''' ===

Although the SEC and DOJ are responsible for enforcing the FCPA, the CFTC can take enforcement actions to combat violations of the CEA connected to corrupt practices, including bribes or kickbacks paid to improperly influence government officials in connection with regulated activities such as trading, advising, or dealing in swaps or derivatives. As explained in a March 6, 2019 CFTC Enforcement Advisory and public remarks by Director of Enforcement James M. McDonald at the ABA’s National Institute on White Collar Crime, the CFTC’s anti-fraud authority permits it to police foreign bribes where violations of the CEA carried out through foreign corrupt practices. McDonald explained: Companies and individuals engaging in foreign corrupt practices should recognize that this sort of misconduct might constitute fraud, manipulation, false reporting, or a number of other types of violations under the CEA, and thus be subject to enforcement actions brought by the CFTC. Bribes might be employed, for example, to secure business in connection with regulated activities like trading, advising, or dealing in swaps or derivatives. Corrupt practices might be used to manipulate benchmarks that serve as the basis for related derivatives contracts. Prices that are the product of corruption might be falsely reported to benchmarks. Or corrupt practices in any number of forms might alter the prices in commodity markets that drive U.S. derivatives prices. We currently have open investigations involving similar conduct.

In December 2020, the CFTC exercised that authority by imposing a $95 million civil penalty to settle charges against Vitol Inc, for manipulative and deceptive conduct involving foreign corruption and physical and derivatives trading in the U.S. and global oil market. The CFTC found that “Vitol committed fraud by making corrupt payments (e.g., bribes and kickbacks) to employees and agents of certain state-owned entities (SOEs) in Brazil, Ecuador, and Mexico to obtain preferential treatment and access to trades with the SOEs to the detriment of the SOEs and other market participants.” The corrupt payments were concealed by funneling them through offshore bank accounts or to shell entities, and at times, issuing deceptive invoices for purported “market intelligence” or “sell support.” The objective of these illicit payments was to secure unlawful competitive advantages in trading physical oil products and derivatives.

=== '''Trading on Material Nonpublic Information''' ===

The Dodd-Frank Act expanded the CFTC’s authority to police misappropriation of confidential information and insider trading in commodities markets. Similar to the SEC’s Rule 10b-5, CFTC Rule 180.1 prohibits manipulative and deceptive devices, i.e., fraud and fraud-based manipulative devices and contrivances employed intentionally or recklessly, regardless of whether the conduct in question was intended to create or did create an artificial price.

The fraud or manipulation must be in connection with any swap, or contract of sale of any commodity in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity. Examples of prohibited trading include:

*trading on material nonpublic information (MNPI) that was obtained by fraud or deception;
*trading on market-moving information that the source had a duty to protect;
*brokers front running customer orders or taking the other side of any customer order without consent; and
*improperly disclosing MNPI or using MNPI provided by a counterparty without the counterparty’s consent.

An example of the CFTC enforcing its prohibition against the misappropriation of MNPI is a September 29, 2016 enforcement taken against Jon P. Ruggles for engaging in fraudulent, fictitious, and non-competitive trades in crude oil and heating oil futures and options and RBOB gasoline futures on the NYMEX. The CFTC’s order settling the charges requires Ruggles to disgorge ill-gotten gains totaling $3,501,306, imposes a civil monetary penalty of $1.75 million, and permanently bans him from trading and registering with the CFTC. Ruggles, who was responsible for developing his former employer’s fuel hedging strategies and for executing the employer’s trades in certain NYMEX products, misappropriated the employer’s trading information for his own benefit in personal accounts that he controlled.

==='''Benchmark Rates Manipulation'''===

In a benchmark-rate-manipulation scheme, individuals seek to increase or decrease impartial global reference rates for their own financial gain. This misconduct is typically associated with the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), benchmark-swap rates, LIBOR, Euribor, and other foreign interest-rate benchmarks.

On May 25, 2016, the CFTC ordered Citibank to pay $250 million for attempted manipulation and false reporting of USD ISDAFIX benchmark-swap rates. According to a CFTC press release, Citibank traders “attempted to manipulate and made false reports concerning the USD ISDAFIX by skewing the Bank’s USD ISDAFIX submissions . . . in order to benefit the Bank’s trading positions at the expense of its derivatives counterparties.” The CFTC uncovered numerous instances of Citibank’s USD ISDAFIX misconduct through the bank’s exotic traders’ instant messages. In March 2008, one of Citibank’s exotics traders stated in separate instant messages to other market participants that “[I] moved the screen btw” and “[I] moved the screen to 183 on 2s10s…[One of Citibank’s swaps traders] is pretty good at it,” and “[I] push the 2s10s swap on the screen to 183.4, very proud of myself.”

=='''Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity'''==

The FY20 reports of the [https://web.archive.org/web/20220705214813/https://www.whistleblower.gov/sites/whistleblower/files/2020-11/FY20%20Report%20to%20Congress.pdf CFTC Whistleblower Program] and [https://www.cftc.gov/PressRoom/PressReleases/8323-20 CFTC Division of Enforcement] reveal that the CFTC Whistleblower Program continues to grow and is helping to drive record-level enforcement activity. The Division of Enforcement reported a total of $1,327,869,760 in monetary relief ordered—the fourth-highest total in CFTC history, the third straight year-over-year increase, and the second straight year in excess of $1 billion. Approximately 30 to 40% of the CFTC’s ongoing investigations now involve some whistleblower component. Since the inception of the [https://www.zuckermanlaw.com/cftc-whistleblower-reward-lawyers/ CFTC Whistleblower Program], CFTC enforcement actions associated with whistleblower awards have resulted in sanctions orders totaling more than $3 billion. In light of the CFTC’s recent whistleblower award of [https://www.zuckermanlaw.com/cftc-shows-whistleblowers-the-money-implications-of-record-200-million-award/ $200 million], whistleblowers will continue to play a pivotal role in enabling the CFTC to carry out its vital enforcement mission.

=='''Anonymous Whistleblowing to the CFTC'''==

If [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ represented by counsel], a whistleblower may submit a tip anonymously to the CFTC. In certain circumstances, a whistleblower may remain anonymous, even to the CFTC, until an award determination. However, even at the time of a reward, a whistleblower’s identity is not made available to the public.

According to a recent report of the CFTC Whistleblower Office, the Office takes steps to protect whistleblower confidentiality. For example, in 2017 the Office considered 267 requests to produce documents from the investigation and litigation files of the Enforcement Division and found 16 requests to implicate whistleblower-identifying information. The Office worked with the Enforcement Division to remove whistleblower-identifying information or otherwise take steps to preserve whistleblower confidentiality.

== '''CFTC Whistleblower Awards''' ==

The table below identifies some of the largest CFTC whistleblowers awards:
{| class="wikitable"
! Whistleblower Award !! Date !! Basis for Whistleblower Award
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7767-18 $45 million] || August 2, 2018 || On August 2, 2018, the CFTC announced a $45 million award to multiple whistleblowers. [https://markets.businessinsider.com/news/stocks/whistleblower-gets-largest-ever-cftc-award-for-exposing-the-isdafix-scandal-garson-segal-steinmetz-fladgate-llp-1027435727 Reports] indicate the award was related to ISDAFIX manipulation enforcement actions.
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7753-18 $30 million] || July 12, 2018 || On July 12, 2018, the CFTC announced its largest-ever whistleblower award given to an individual. The whistleblower exposed that [https://www.sec.gov/news/pressrelease/2015-283.html JP Morgan] did not properly disclose conflicts of interests to clients. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/Final%20Orders/16-WB-08.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7351-16 $10 million] || March 28, 2016 || On April 4, 2016, the CFTC announced a $10 million award given to an individual. The whistleblower provided “valuable information” regarding violations of the Commodity Exchange Act. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/Final%20Orders/16-WB-06.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/8022-19 $7 million] || September 27, 2019 || On September 27, 2019, the CFTC issued a $7 million award to a whistleblower. CFTC Director of Enforcement James McDonald stated in the Press Release: “Forty percent of our investigations now involve whistleblowers. We expect that number to increase as the CFTC continues to expand its whistleblower program.” Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-09/19-WB-05.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/8175-20 $6 million] || June 9, 2020 || On June 9, 2020, the CFTC issued a $6 million award to a whistleblower who voluntarily provided original information that led the CFTC to bring a successful enforcement action.
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7943-19 $2.5 million] || June 24, 2019 || On July 24, 2019, the CFTC issued a $2.5 million whistleblower award to an individual. The award was reduced due to the whistleblower’s delay in reporting. Director McDonald stated the delay was “unreasonable.” Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/19-WB-03.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7953-19 $2 million] || July 1, 2019 || On July 1, 2019, the CFTC issued a $2 million whistleblower award to two whistleblowers who provided multiple interviews and documents. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-07/19-WB-04.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7882-19 $2 million] || March 4, 2019 || On March 4, 2019, the CFTC announced an award of over $2 million to a whistleblower who conducted an "independent analysis" of market data, greatly aiding the investigation. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-03/19-WB-01%20-%20Public%20Version.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7924-19 $1.5 million] || May 6, 2019 || On May 6, 2019, the CFTC announced a $1.5 million award to a whistleblower who first attempted internal reporting. The award was granted for both a CFTC action and a related action by another federal regulator. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-05/19-WB-02%20-%20Public%20Version.pdf here].
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7882-19 $290,000] || September 29, 2015 || On September 29, 2015, the CFTC announced an award of $290,000 to a whistleblower. Two applicants applied, but only one received the award.
|-
| [https://www.cftc.gov/PressRoom/PressReleases/7767-18 $240,000] || May 20, 2014 || On May 20, 2014, the CFTC announced its first-ever whistleblower award of $240,000 for providing “specific, timely and credible information.”
|}

== '''Protections Against Whistleblower Retaliation'''==

Whistleblowers are also afforded substantial protection against retaliation. Specifically, '''an employer may not “discharge, demote, suspend, threaten, harass, directly or indirectly, or in any manner discriminates against, a whistleblower” for legally reporting wrongdoing.''' In the event that an employer retaliates against a whistleblower, the law provides for substantial relief. This may include reinstatement, back pay, and compensation for related expenses such as litigation costs and reasonable attorneys’ fees.

A whistleblower is entitled to this protection even if they do not receive a reward. The anti-retaliation provision applies to any whistleblower who possesses “a reasonable belief that the information the whistleblower is providing relates to a possible violation of the Commodity Exchange Act (CEA), or the rules or regulations thereunder, that has occurred, is ongoing, or is about to occur.”

The CFTC can take enforcement action against an employer that “retaliates against a whistleblower by discharge, demotion, suspension, direct or indirect threats or harassment, or any other manner of discrimination” because the whistleblower provided “information to the Commission after reporting the information through internal whistleblower, legal or compliance procedures.” 17 C.F.R. 165.20(b).

==='''Acts of Retaliation are Prohibited by the CFTC Whistleblower Protection Law'''===

The CEA prohibits an employer from discharging, demoting, suspending, threatening or harassing, or in any other manner discriminating against, a whistleblower in the terms and conditions of employment because of any protected whistleblowing.

==='''The Burden to Prevail in a CFTC Whistleblower Retaliation Claim'''===

To prevail, a whistleblower must prove “but-for” causation, which is not tantamount to “sole factor” causation. In Bostock v. Clayton Cty., the Supreme Court clarified the burden of proving “but for” causation:

Title VII’s ‘because of’ test incorporates the "simple" and "traditional" standard of but-for causation. Nassar, 570 U. S., at 346, 360, 133 S. Ct. 2517. That form of causation is established whenever a particular outcome would not have happened ‘but for’ the purported cause. See Gross, 557 U. S. at 176, 129 S. Ct. 2343. In other words, a but-for test directs us to change one thing at a time and see if the outcome changes. If it does, we have found a but-for cause.

==='''Private Right of Action under Section 23(h)(1)(A) of the Commodity Exchange Act'''===

The CEA authorizes a whistleblower to bring a CFTC whistleblower retaliation claim in federal court.

==='''Statute of Limitations for a CFTC Whistleblower Retaliation Claim'''===

The statue of limitations for a CFTC whistleblower retaliation claim is two years after the date on which the act of retaliation is committed.

==='''Arbitration of a CFTC Whistleblower Retaliation'''===

An employer can not require arbitration of a CFTC whistleblower retaliation claim. The Dodd-Frank Act expressly provides that CFTC whistleblower retaliation claims are not subject to pre-dispute arbitration agreements. See 7 U.S.C. § 26(n).

==='''Other Whistleblower Protection Laws May Provide a Remedy for Retaliation for Corporate Whistleblowers'''===

Other federal and state whistleblower protection laws may provide an additional remedy, including New York’s recently amended whistleblower protection law.

=='''CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements'''==

The rules implementing the CFTC whistleblower program '''prohibit employers from taking steps to impede whistleblowers from communicating with the CFTC staff.''' In particular, 17 C.F.R. § 165.19(b) provides:

No person may take any action to impede an individual from communicating directly with the Commission’s staff about a possible violation of the Commodity Exchange Act, including by enforcing, or threatening to enforce, a confidentiality agreement or predispute arbitration agreement with respect to such communications.

This prohibition is critical to the success of any whistleblower program because '''companies often use overly broad confidentiality agreements to silence and punish whistleblowers.'''

CFTC Whistleblower Program

2025-02-13T22:59:52Z

Admin: /* Protections Against Whistleblower Retaliation */

CFTC Whistleblower Program

2025-02-13T22:57:38Z

Admin: /* CFTC Whistleblower Awards */

CFTC Whistleblower Program

2025-02-13T22:55:32Z

Admin: /* CFTC Whistleblower Awards */

CFTC Whistleblower Program

2025-02-13T22:51:10Z

Admin: /* Anonymous Whistleblowing to the CFTC */

=='''Overview'''==

'''The CFTC Whistleblower Reward Program provides whistleblowers with a strong monetary incentive, as well as anti-retaliation protections, for reporting wrongdoing to the CFTC.''' This includes violations or fraud in connection with:

* Commodity futures
* Commodity options
* [https://www.zuckermanlaw.com/swap-reporting-cftc-whistleblower-lawyers/ Swap trading markets]
* Derivatives
* [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/FCPA%20WBO%20Alert.pdf Foreign corrupt practices Foreign corrupt practices]

Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, market manipulation schemes and spoofing. Whistleblower tips to CFTC have helped drive record-level enforcement activity.

Since 2014, the CFTC has issued more than $120 million in awards to whistleblowers. The largest CFTC whistleblower awards to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.

Under the CFTC Whistleblower Reward Program, the CFTC will issue rewards to whistleblowers who provide original information that leads to CFTC enforcement actions with total civil penalties in excess of $1 million (see [https://www.cftc.gov/PressRoom/PressReleases/8165-20 how the CFTC calculates monetary sanctions]). A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

Original information “leads to” a successful enforcement action if either:

#The original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or
#The conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.

In determining a reward percentage, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake.

Whistleblowers may still be eligible for a reward under the CFTC Whistleblower Reward Program even if they have already received a reward under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Reward Program.]

=='''Violations that Qualify for a CFTC Whistleblower Award'''==

The largest CFTC whistleblower awards to date are $200 million, $45 million, and $30 million. The main types of violations that may qualify for a CFTC whistleblower award include spoofing, corrupt practices, trading on material nonpublic information, and benchmark rates manipulation.

==='''Spoofing'''===
Spoofing is a form of market manipulation where traders artificially inflate the supply and demand of an asset to increase profits. Traders engaged in spoofing typically place a large number of orders to buy or sell a certain stock or asset without the intent to follow through on the orders. This deceptive trading practice leads other market participants to wrongly believe that there is pressure to act on that asset and “spoofs” other participants to place orders at artificially altered prices.

Spoofing affects prices because the artificial increase in activity on either the buy or sell side of an asset creates the perception that there is a shift in the number of investors wanting to buy or sell. Spoofers place false bids or offers with the intent to cancel before executing so that they can then follow-through on genuine orders at a more favorable price. Often, spoofers use automated trading and algorithms to achieve their goals. According to a CFTC alert on spoofing related to CEA violations, the CFTC is concerned with conduct such as:

*manual and automated trading schemes that place and quickly cancel bids and offers in futures contracts in order to benefit other orders and/or positions;
*orders being quickly placed and canceled at or near the best bid or offer, especially if opposite-side orders are filled;
*multiple orders of the same size repeatedly and simultaneously being placed and canceled; and
*any scheme designed to cause prices to artificially move.

Examples of CFTC spoofing enforcement actions include:

*In November 2019, the CFTC imposed '''[https://www.cftc.gov/PressRoom/PressReleases/8074-19 $67.4 million in sanctions against Tower Research Capital LLC]''', a proprietary trading firm, arising from a manipulative and deceptive scheme. On thousands of occasions, three former Tower traders, placed orders to buy or sell futures contracts with the intent to cancel those orders prior to execution. The traders often used an order splitter to enter several smaller, randomly-sized orders in an attempt to obscure their scheme from other market participants. According to a CFTC press release, “[t]he traders engaged in this scheme to induce other market participants to trade against their genuine orders—by intentionally sending a false signal to the market that they wanted to buy or sell the number of contracts specified in the spoof orders and creating a false impression of supply or demand—so that the genuine orders would fill sooner, at better prices, or in larger quantities than they otherwise would.”
*In August 2021, a federal jury convicted Edward Bases and John Pacilio, two former Merrill Lynch traders, for engaging in a multi-year fraud scheme to manipulate the precious metals market. According to a press release announcing the action, the two traders fraudulently pushed market prices up or down by routinely placing large “spoof” orders in the precious metals futures markets that they did not intend to fill. After manipulating the market, Bases and Pacilio executed trades at favorable prices for their own gain, and to the detriment of other traders. The DOJ’s indictment detailed how Bases and Pacilio discussed their intent to “push” the market through spoofing in electronic chat conversations.
*In September 2020, JPMorgan Chase & Co. agreed to pay disgorgement of $920 million in parallel actions brought by the CFTC, DOJ, and the SEC engaging in manipulative trading of U.S. Treasury securities. According to the SEC’s order, certain traders on J.P. Morgan Securities’ Treasuries trading desk placed genuine orders to buy or sell a particular Treasury security, while nearly simultaneously placing spoofing orders, which the traders did not intend to execute, for the same series of Treasury security on the opposite side of the market. The spoofing orders were intended to create a false appearance of buy or sell interest, which would induce other market participants to trade against the genuine orders at prices that were more favorable to J.P. Morgan Securities than J.P. Morgan Securities otherwise would have been able to obtain.

=== '''Corrupt Practices''' ===

Although the SEC and DOJ are responsible for enforcing the FCPA, the CFTC can take enforcement actions to combat violations of the CEA connected to corrupt practices, including bribes or kickbacks paid to improperly influence government officials in connection with regulated activities such as trading, advising, or dealing in swaps or derivatives. As explained in a March 6, 2019 CFTC Enforcement Advisory and public remarks by Director of Enforcement James M. McDonald at the ABA’s National Institute on White Collar Crime, the CFTC’s anti-fraud authority permits it to police foreign bribes where violations of the CEA carried out through foreign corrupt practices. McDonald explained: Companies and individuals engaging in foreign corrupt practices should recognize that this sort of misconduct might constitute fraud, manipulation, false reporting, or a number of other types of violations under the CEA, and thus be subject to enforcement actions brought by the CFTC. Bribes might be employed, for example, to secure business in connection with regulated activities like trading, advising, or dealing in swaps or derivatives. Corrupt practices might be used to manipulate benchmarks that serve as the basis for related derivatives contracts. Prices that are the product of corruption might be falsely reported to benchmarks. Or corrupt practices in any number of forms might alter the prices in commodity markets that drive U.S. derivatives prices. We currently have open investigations involving similar conduct.

In December 2020, the CFTC exercised that authority by imposing a $95 million civil penalty to settle charges against Vitol Inc, for manipulative and deceptive conduct involving foreign corruption and physical and derivatives trading in the U.S. and global oil market. The CFTC found that “Vitol committed fraud by making corrupt payments (e.g., bribes and kickbacks) to employees and agents of certain state-owned entities (SOEs) in Brazil, Ecuador, and Mexico to obtain preferential treatment and access to trades with the SOEs to the detriment of the SOEs and other market participants.” The corrupt payments were concealed by funneling them through offshore bank accounts or to shell entities, and at times, issuing deceptive invoices for purported “market intelligence” or “sell support.” The objective of these illicit payments was to secure unlawful competitive advantages in trading physical oil products and derivatives.

=== '''Trading on Material Nonpublic Information''' ===

The Dodd-Frank Act expanded the CFTC’s authority to police misappropriation of confidential information and insider trading in commodities markets. Similar to the SEC’s Rule 10b-5, CFTC Rule 180.1 prohibits manipulative and deceptive devices, i.e., fraud and fraud-based manipulative devices and contrivances employed intentionally or recklessly, regardless of whether the conduct in question was intended to create or did create an artificial price.

The fraud or manipulation must be in connection with any swap, or contract of sale of any commodity in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity. Examples of prohibited trading include:

*trading on material nonpublic information (MNPI) that was obtained by fraud or deception;
*trading on market-moving information that the source had a duty to protect;
*brokers front running customer orders or taking the other side of any customer order without consent; and
*improperly disclosing MNPI or using MNPI provided by a counterparty without the counterparty’s consent.

An example of the CFTC enforcing its prohibition against the misappropriation of MNPI is a September 29, 2016 enforcement taken against Jon P. Ruggles for engaging in fraudulent, fictitious, and non-competitive trades in crude oil and heating oil futures and options and RBOB gasoline futures on the NYMEX. The CFTC’s order settling the charges requires Ruggles to disgorge ill-gotten gains totaling $3,501,306, imposes a civil monetary penalty of $1.75 million, and permanently bans him from trading and registering with the CFTC. Ruggles, who was responsible for developing his former employer’s fuel hedging strategies and for executing the employer’s trades in certain NYMEX products, misappropriated the employer’s trading information for his own benefit in personal accounts that he controlled.

==='''Benchmark Rates Manipulation'''===

In a benchmark-rate-manipulation scheme, individuals seek to increase or decrease impartial global reference rates for their own financial gain. This misconduct is typically associated with the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), benchmark-swap rates, LIBOR, Euribor, and other foreign interest-rate benchmarks.

On May 25, 2016, the CFTC ordered Citibank to pay $250 million for attempted manipulation and false reporting of USD ISDAFIX benchmark-swap rates. According to a CFTC press release, Citibank traders “attempted to manipulate and made false reports concerning the USD ISDAFIX by skewing the Bank’s USD ISDAFIX submissions . . . in order to benefit the Bank’s trading positions at the expense of its derivatives counterparties.” The CFTC uncovered numerous instances of Citibank’s USD ISDAFIX misconduct through the bank’s exotic traders’ instant messages. In March 2008, one of Citibank’s exotics traders stated in separate instant messages to other market participants that “[I] moved the screen btw” and “[I] moved the screen to 183 on 2s10s…[One of Citibank’s swaps traders] is pretty good at it,” and “[I] push the 2s10s swap on the screen to 183.4, very proud of myself.”

=='''Whistleblowers Will Continue to Drive Increased CFTC Enforcement Activity'''==

The FY20 reports of the [https://web.archive.org/web/20220705214813/https://www.whistleblower.gov/sites/whistleblower/files/2020-11/FY20%20Report%20to%20Congress.pdf CFTC Whistleblower Program] and [https://www.cftc.gov/PressRoom/PressReleases/8323-20 CFTC Division of Enforcement] reveal that the CFTC Whistleblower Program continues to grow and is helping to drive record-level enforcement activity. The Division of Enforcement reported a total of $1,327,869,760 in monetary relief ordered—the fourth-highest total in CFTC history, the third straight year-over-year increase, and the second straight year in excess of $1 billion. Approximately 30 to 40% of the CFTC’s ongoing investigations now involve some whistleblower component. Since the inception of the [https://www.zuckermanlaw.com/cftc-whistleblower-reward-lawyers/ CFTC Whistleblower Program], CFTC enforcement actions associated with whistleblower awards have resulted in sanctions orders totaling more than $3 billion. In light of the CFTC’s recent whistleblower award of [https://www.zuckermanlaw.com/cftc-shows-whistleblowers-the-money-implications-of-record-200-million-award/ $200 million], whistleblowers will continue to play a pivotal role in enabling the CFTC to carry out its vital enforcement mission.

=='''Anonymous Whistleblowing to the CFTC'''==

If [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ represented by counsel], a whistleblower may submit a tip anonymously to the CFTC. In certain circumstances, a whistleblower may remain anonymous, even to the CFTC, until an award determination. However, even at the time of a reward, a whistleblower’s identity is not made available to the public.

According to a recent report of the CFTC Whistleblower Office, the Office takes steps to protect whistleblower confidentiality. For example, in 2017 the Office considered 267 requests to produce documents from the investigation and litigation files of the Enforcement Division and found 16 requests to implicate whistleblower-identifying information. The Office worked with the Enforcement Division to remove whistleblower-identifying information or otherwise take steps to preserve whistleblower confidentiality.

== '''CFTC Whistleblower Awards''' ==

The table below identifies some of the largest CFTC whistleblowers awards:
{| class="wikitable"
! Whistleblower Award !! Date !! Basis for Whistleblower Award
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7767-18 $45 million] || August 2, 2018 || On August 2, 2018, the CFTC announced a $45 million award to multiple whistleblowers. [https://web.archive.org/web/20220705184519/https://markets.businessinsider.com/news/stocks/whistleblower-gets-largest-ever-cftc-award-for-exposing-the-isdafix-scandal-garson-segal-steinmetz-fladgate-llp-1027435727 Reports] indicate the award was related to ISDAFIX manipulation enforcement actions.
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7753-18 $30 million] || July 12, 2018 || On July 12, 2018, the CFTC announced its largest-ever whistleblower award given to an individual. The whistleblower exposed that [https://web.archive.org/web/20220705184519/https://www.sec.gov/news/pressrelease/2015-283.html JP Morgan] did not properly disclose conflicts of interests to clients. Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/Final%20Orders/16-WB-08.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7351-16 $10 million] || March 28, 2016 || On April 4, 2016, the CFTC announced a $10 million award given to an individual. The whistleblower provided “valuable information” regarding violations of the Commodity Exchange Act. Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/Final%20Orders/16-WB-06.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/8022-19 $7 million] || September 27, 2019 || On September 27, 2019, the CFTC issued a $7 million award to a whistleblower. CFTC Director of Enforcement James McDonald stated in the Press Release: “Forty percent of our investigations now involve whistleblowers. We expect that number to increase as the CFTC continues to expand its whistleblower program.” Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/2019-09/19-WB-05.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/8175-20 $6 million] || June 9, 2020 || On June 9, 2020, the CFTC issued a $6 million award to a whistleblower who voluntarily provided original information that led the CFTC to bring a successful enforcement action.
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7943-19 $2.5 million] || June 24, 2019 || On July 24, 2019, the CFTC issued a $2.5 million whistleblower award to an individual. The award was reduced due to the whistleblower’s delay in reporting. Director McDonald stated the delay was “unreasonable.” Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/2019-06/19-WB-03.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7953-19 $2 million] || July 1, 2019 || On July 1, 2019, the CFTC issued a $2 million whistleblower award to two whistleblowers who provided multiple interviews and documents. Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/2019-07/19-WB-04.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7882-19 $2 million] || March 4, 2019 || On March 4, 2019, the CFTC announced an award of over $2 million to a whistleblower who conducted an "independent analysis" of market data, greatly aiding the investigation. Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/2019-03/19-WB-01%20-%20Public%20Version.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7924-19 $1.5 million] || May 6, 2019 || On May 6, 2019, the CFTC announced a $1.5 million award to a whistleblower who first attempted internal reporting. The award was granted for both a CFTC action and a related action by another federal regulator. Find the order [https://web.archive.org/web/20220705184519/https://www.whistleblower.gov/sites/whistleblower/files/2019-05/19-WB-02%20-%20Public%20Version.pdf here].
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7882-19 $290,000] || September 29, 2015 || On September 29, 2015, the CFTC announced an award of $290,000 to a whistleblower. Two applicants applied, but only one received the award.
|-
| [https://web.archive.org/web/20220705184519/https://www.cftc.gov/PressRoom/PressReleases/7767-18 $240,000] || May 20, 2014 || On May 20, 2014, the CFTC announced its first-ever whistleblower award of $240,000 for providing “specific, timely and credible information.”
|}

CFTC Whistleblower Program

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CFTC Whistleblower Program

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CFTC Whistleblower Program

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SEC Whistleblower Program

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== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== '''[https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success]''' ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== '''SEC Office of the Whistleblower''' ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== '''SEC Whistleblower Rules''' ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

=='''Criteria for Determining the Amount of a Whistleblower Award'''==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== '''Securities Law Violations that Qualify for an SEC Whistleblower Award''' ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

=='''Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement'''==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

=='''The Conduct-and-Effects Test'''==
Through the [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act], Congress amended the federal securities laws to include the conduct-and-effects test:

The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of section 77q(a) of this title [Section 17(a) of the 1933 Securities Act] involving:

#conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; or
#conduct occurring outside the United States that has a foreseeable substantial effect within the United States. See [https://www.law.cornell.edu/uscode/text/15/77v 15 U.S.C. § 77v(c)]

=='''SEC Enforcement Action Against International Ponzi Scheme'''==
On January 24, 2019, in [https://www.sec.gov/litigation/litreleases/2016/lr23604.htm SEC v. Scoville], the United States Court of Appeals for the Tenth Circuit held (see opinion below) that Congress, in enacting the Dodd-Frank Act’s amendments to the jurisdictional provisions of the securities laws, “undoubtedly intended that the substantive antifraud provisions should apply extraterritorially when the statutory conduct-and-effects test is satisfied.” The Tenth Circuit proceeded to apply the test to a [https://www.sec.gov/litigation/complaints/2016/comp23604.pdf $207 million international Ponzi scheme], which had 90% of its customers outside the United States. The Ponzi scheme involved the sales of investment contracts by Traffic Monsoon, LLC, whose sole owner and member is Charles Scoville. The Tenth Circuit found that the Defendant’s actions satisfied the conduct-and-effects test because:

#The Defendant’s company was located in the United States.
#Through his company, the Defendant created and promoted the investments over the internet while residing in the United States.
#The servers housing the company’s website were physically located in the United States.

The Tenth Circuit is the first Circuit Court to address the scope of the SEC’s extraterritorial enforcement authority under the Dodd-Frank Act. The opinion highlights the SEC’s expansive international reach against fraudsters. For additional analysis of the Tenth Circuit’s opinion, see a recent article in the Harvard Law School Forum on Corporate Governance and Financial Regulation, [https://corpgov.law.harvard.edu/2019/06/09/a-new-era-of-extraterritorial-sec-enforcement-actions/ A New Era of Extraterritorial SEC Enforcement Actions.] In November 2019, the U.S. Supreme Court [https://news.bloomberglaw.com/securities-law/high-court-denies-review-in-sec-fraud-extraterritoriality-case declined to review the case.]

SEC Whistleblower Program

2025-02-13T03:56:30Z

Admin: /* International Schemes and SEC Enforcement Actions */

SEC Whistleblower Program

2025-02-13T03:53:49Z

Admin: /* Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement */

SEC Whistleblower Program

2025-02-13T03:53:37Z

Admin: /* Securities Law Violations that Qualify for an SEC Whistleblower Award */

== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== '''[https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success]''' ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== '''SEC Office of the Whistleblower''' ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== '''SEC Whistleblower Rules''' ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

=='''Criteria for Determining the Amount of a Whistleblower Award'''==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== '''Securities Law Violations that Qualify for an SEC Whistleblower Award''' ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:53:23Z

Admin: /* Criteria for Determining the Amount of a Whistleblower Award */

== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== '''[https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success]''' ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== '''SEC Office of the Whistleblower''' ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== '''SEC Whistleblower Rules''' ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

=='''Criteria for Determining the Amount of a Whistleblower Award'''==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:53:13Z

Admin: /* SEC Whistleblower Rules */

== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== '''[https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success]''' ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== '''SEC Office of the Whistleblower''' ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== '''SEC Whistleblower Rules''' ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:53:05Z

Admin: /* SEC Office of the Whistleblower */

== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== '''[https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success]''' ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== '''SEC Office of the Whistleblower''' ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== SEC Whistleblower Rules ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:52:53Z

Admin: /* SEC Whistleblower Program A Success */

== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== '''[https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success]''' ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== SEC Office of the Whistleblower ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== SEC Whistleblower Rules ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:52:39Z

Admin: /* Overview */

== '''Overview''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== [https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success] ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== SEC Office of the Whistleblower ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== SEC Whistleblower Rules ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:52:25Z

Admin: /* Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions” */

== Overview ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== [https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success] ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== SEC Office of the Whistleblower ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== SEC Whistleblower Rules ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== '''Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions”''' ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:52:08Z

Admin: /* Lessons Learned from SEC Whistleblower Award Determinations */

== Overview ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== [https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success] ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== SEC Office of the Whistleblower ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== SEC Whistleblower Rules ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions” ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== '''Lessons Learned from SEC Whistleblower Award Determinations''' ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.

SEC Whistleblower Program

2025-02-13T03:51:57Z

Admin: /* Tip #1: Establish a Material Violation */

== Overview ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions (penalties, disgorgement, and interest) in excess of $1 million. In exchange for the valuable information, '''a whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.'''

In determining an award percentage, the SEC considers the particular facts and circumstances of each case. For example, positive factors that may increase an award percentage include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake. On the other hand, negative factors that may decrease an award percentage include unreasonable delay in reporting the violation to the SEC and the culpability or involvement of the whistleblower in the violation.

Under the SEC Whistleblower Reward Program, '''whistleblowers can [https://riskandcompliancemagazine.com/tips-for-whistleblowers-to-qualify-for-an-sec-whistleblower-award submit tips anonymously]''' to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws.

The SEC Whistleblower Program continued its remarkable run of success in FY 2020. According to the SEC Whistleblower Office’s [https://web.archive.org/web/20220623171445/https://www.sec.gov/files/2020%20Annual%20Report_0.pdf 2020 Annual Report to Congress], the office received more than 6,900 tips in the fiscal year. This is the highest number of tips the office has received in one year. Most whistleblower tips related to corporate disclosures and financials (25%), offering fraud (16%) and market manipulation (14%). Other notable areas of tips included insider trading, trading and pricing schemes, foreign bribery and other FCPA violations, unregistered securities offerings and fraud in connection with initial coin offerings (ICOs) and cryptocurrencies. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips that have enabled the SEC to recover more than $3.5 billion in monetary sanctions from wrongdoers.

Consistent with prior years, the states that yielded the highest number of tips in FY 2020 were California, New York, Florida, Texas, and Pennsylvania. Other states that reported a high number of tips were Arizona, Georgia, Massachusetts, Michigan, North Carolina, Ohio, New Jersey, Virginia and Washington. The SEC Whistleblower Office also received tips from 78 foreign countries in FY 2020. The highest number of tips were from whistleblowers in Canada, the United Kingdom and the People’s Republic of China.

'''Whistleblowers need not be U.S. citizens to be eligible for SEC whistleblower awards.''' According to the [https://www.transparency.org/en/news/corruption-perceptions-index-2017 2017 Corruption Perceptions] Index, a majority of countries are making little or no progress in ending corruption. This finding is consistent with [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ PwC’s 2018 fraud survey], which reported the highest fraud levels in organizations in the past 20 years, and the [https://www.pwc.com/gx/en/services/forensics/economic-crime-survey.html/ ACFE’s 2021 fraud survey], which reported that 51% of organizations have uncovered more fraud since the pandemic and 71% of anti-fraud professionals expect the level of fraud to increase over the next year. As the SEC continues to promote worldwide public awareness of the SEC Whistleblower Program, we expect to see an increase in whistleblower tips and awards in the coming years.

== [https://www.goingconcern.com/6-reasons-sec-whistleblower-program-successful/ SEC Whistleblower Program A Success] ==

The report also indicates that the '''[https://www.dandodiary.com/2020/07/articles/whistleblowers/guest-post-how-the-sec-whistleblower-program-has-changed-corporate-compliance-and-sec-enforcement/ SEC Whistleblower Program is gaining momentum]'''. In particular, the SEC Office of the Whistleblower, which first opened its doors in August 2011, has issued a majority of the whistleblower awards in the past several years:

*In [https://www.sec.gov/files/owb-annual-report-2015.pdf FY 2015], the SEC issued $37 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2016.pdf FY 2016], the SEC issued $57 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2017.pdf FY 2017], the SEC issued $50 million in awards to whistleblowers.
*In [https://www.sec.gov/files/owb-annual-report-2018.pdf FY 2018], the SEC issued $168 million in awards to whistleblowers.
*In [https://www.sec.gov/files/OW_2019AR_FINAL_1.pdf FY 2019], the SEC issued $60 million in awards to whistleblowers.
*In [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf FY 2020], the SEC issued $175 million in awards to whistleblowers.

Notably, FY 2021 is shaping up to be the best year in the SEC Whistleblower Program’s history. '''On October 22, 2020, the SEC issued the largest whistleblower award in the program’s history of [https://www.sec.gov/news/press-release/2020-266 $114 million]'''. In addition, according to the SEC’s 2020 [https://www.sec.gov/files/sec-2020-agency-financial-report_1.pdf Agency Report], the SEC recognized a $255 million contingent liability for potential whistleblower awards to be paid in FY 2021.

== SEC Office of the Whistleblower ==

In 2011, the SEC Office of the Whistleblower was created pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to run the SEC Whistleblower Reward Program. The program offers monetary incentives to individuals who report information about violations of the federal securities laws to the SEC. '''[https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/?sh=6b06bf9a3009#526977113009 In its short history, the SEC Whistleblower Reward Program has been extraordinarily successful in enabling the SEC root out securities fraud and protect investors.]''' To date, the SEC Office of the Whistleblower has issued more than $500 million in awards to whistleblowers.

== SEC Whistleblower Rules ==

Under the rules of the program, the SEC Office of the Whistleblower is required to issue awards to eligible whistleblowers who provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. In exchange for the specific and credible tips, '''whistleblowers will receive an award of between 10% and 30% of the total monetary sanctions collected.''' The SEC considers positive and negative factors when determining an award percentage.

The program allows individuals to submit information anonymously to the SEC Office of the Whistleblower if represented by an attorney. Whistleblowers are also afforded substantial protection against retaliation.

Regardless of citizenship, under the [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ SEC Whistleblower Program], whistleblowers are eligible for monetary awards when they provide original information to the SEC about violations of federal securities laws.

Since the inception of the whistleblower program, tips have come from whistleblowers in '''[https://www.sec.gov/files/sec-2018-annual-report-whistleblower-program.pdf 119 countries outside of the United States]'''. In 2018 alone, the SEC received tips from whistleblowers in 72 foreign countries. The SEC Whistleblower Office received the highest number of tips from whistleblowers in the: United Kingdom, Canada, and Australia.

To date, the SEC Whistleblower Office has issued approximately [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ $1 billion in awards to whistleblowers.] The [/https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards to date] are $50 million, $39 million, and $37 million. For more information about the SEC Whistleblower Program, see the eBook [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.]

==Criteria for Determining the Amount of a Whistleblower Award==

Many factors affect the amount of a whistleblower award. The SEC may increase the amount of an award based on the following factors:

#The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
##the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
##the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
#The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
##whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
##the timeliness of your initial report to the SEC or to your employer;
##the resources conserved because of your assistance;
##whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
##your efforts to remediate the harm caused by the violations; and
##any unique hardships you experienced as a result of blowing the whistle.
#The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
##how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
##the degree to which an award encourages the submission of high-quality information;
##whether the specific violation is an SEC priority; and
##the dangers of the specific violation to investors.
#Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
##whether you reported internally before, or at the same time as, you reported to the SEC; and
##whether you assisted any internal investigation concerning the violation.
Conversely, the SEC may reduce the amount of an award based on these considerations:
#If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
##your role in the violation;
##your education, training, experience, and position of responsibility at the time the violation occurred;
##whether you acted knowingly and intentionally;
##whether you financially benefitted from the violation;
##whether you committed a violation in the past;
##the egregiousness of the underlying violation; and
##whether you knowingly interfered with the SEC’s investigation of the violation.
#If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
##whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
##whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
##whether there was a legitimate reason for you to delay reporting the violation.
#If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
##interfered with your company’s reporting systems to prevent or delay detection of the violation; or
##made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

== Securities Law Violations that Qualify for an SEC Whistleblower Award ==
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Accounting_fraud Accounting fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_fraud Investment fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Ponzi_schemes Ponzi schemes]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign bribery and FCPA violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Cryptocurrency_fraud Cryptocurrency fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Promissory_note_fraud Promissory note fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/EB-5_investment_Fraud EB-5 investment Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Fraudulent_Securities_Offerings Fraudulent Securities Offerings]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Improper_Revenue_Recognition Improper Revenue Recognition]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Inadequate_Internal_Controls Inadequate Internal Controls]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Deceptive_Non-GAAP_Financials Deceptive Non-GAAP Financials]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Manipulation_of_a_Security%E2%80%99s_Price_or_Volume Manipulation of a Security’s Price or Volume]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Insider_Trading Insider Trading]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Hedge_Fund_Fraud Hedge Fund Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Unregistered_Broker-dealers Unregistered Broker-dealers]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Investment_Adviser_Fraud Investment Adviser Fraud]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Anti-money_laundering_violations Anti-money laundering violations]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/False_or_Misleading_Statements_About_a_Company_or_Investment False or Misleading Statements About a Company or Investment]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Violations_of_Auditor_Independence_Rules Violations of Auditor Independence Rules]
* [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Misleading_or_Incomplete_Cybersecurity_Disclosures Misleading or Incomplete Cybersecurity Disclosures]

==Awards Paid from a Deferred Prosecution Agreement or Non-Prosecution Agreement==

In September 2020, the [https://www.zuckermanlaw.com/sec-adopts-amendments-to-whistleblower-rules-that-will-strengthen-some-aspects-of-the-program-but-also-reduce-large-awards-and-limit-protection-against-retaliation/ SEC revised its whistleblower rules] to add a new paragraph (3) to existing Rule 21F-4(d) to provide that the term “administrative action” includes a deferred prosecution agreement (“DPA”) or a non-prosecution agreement (“NPA”) entered into by DOJ as well as a settlement agreement entered into by the SEC outside of the context of a judicial or administrative proceeding to address violations of the securities laws; and further that any money required to be paid in such actions will be deemed a “monetary sanction” within the meaning of Rule 21F-4(e).

This proposed addition to Rule 21F-4 sought to make awards available to meritorious whistleblowers in cases where these alternative vehicles are used to address violations of law. Its premise was the same as that underlying current Rule 21F-4(d)(1) — that Congress did not intend for meritorious whistleblowers to be denied awards simply because of the procedural vehicle that the SEC (or another governmental entity) has selected to resolve an enforcement matter.

== Rationale for Deeming Payments made under DPAs and NPAs as “Monetary Sanctions” ==

The September 2020 SEC release adopting [https://www.sec.gov/rules/final/2020/34-89963.pdf amendments] to the rules governing the [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] explains the rationale for deeming payments made under DPAs and NPAs as “monetary sanctions” on which an award can be based:

First, we have decided not to extend the rule to DPAs and NPAs entered into by state attorneys general in criminal cases. Second, we have added the modifier “similar” in paragraph (d)(3)(ii), which describes the Commission settlement agreements to which the rule will apply, in order to clarify the features of these agreements that merit treating them as administrative actions that impose monetary sanctions. Third, we have decided to apply the rule to any DPA, NPA, or Commission settlement agreement that would otherwise fall within the terms of the rule (provided that the agreement was entered into after July 21, 2010, which is the date after which the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect).

. . . Several circumstances inform our decision to treat DPAs and NPAs entered into by DOJ as forms of “administrative action” for purposes of Section 21F. First, DOJ itself recognizes the importance of DPAs and NPAs in the hierarchy of tools that are available for addressing criminal misconduct on the part of companies, their officers, and their employees.28 DOJ has explained that DPAs and NPAs provide a “middle ground” for resolution of a criminal matter in circumstances where a declination is determined to be inappropriate, but a conviction of a company may have significant collateral consequences for innocent third parties. Second, DPAs and NPAs entered into by DOJ ordinarily impose significant continuing obligations and conditions on subject companies, coupled with clear and substantial consequences for default–including the continuation or initiation of criminal prosecution. Thus, on its face, the terms of a DPA or an NPA reflect a substantive resolution of a criminal matter by DOJ–in other words, an action–and not simply the closing of the investigation.

For similar reasons, it is reasonable to view payments made under DOJ DPAs and NPAs as “monetary sanctions” on which a whistleblower award can be based. Section 21F(a)(4) defines “monetary sanctions,” in relevant part, as “monies, including penalties, disgorgement, and interest, ordered to be paid… as a result of such action or any settlement of such action.” The payments required under a DPA or an NPA with DOJ are enforceable as a result of the company’s admissions of facts and liability, which would support the government’s criminal charges, coupled with the company’s agreement to toll applicable statutes of limitations in the event DOJ determines (in its sole discretion) that prosecution is warranted because the company has breached the agreement. Given these provisions, the practical effect of a DPA or an NPA is to compel the subject company to make the monetary payments to which it has agreed or face the possibility of criminal prosecution on the basis of its previous admissions. Under these circumstances, payments made under a DPA or an NPA with DOJ are reasonably viewed as “ordered” within the meaning of Section 21F.

In the implementation of our whistleblower program to date we have not had occasion to consider a DPA or an NPA entered into by a state attorney general in a criminal case. We proposed to include such agreements in Rule 21F-4(d)(3)(i) in the expectation that they should generally be similar in nature to DPAs and NPAs entered into by DOJ. However, we are persuaded by the concern expressed by one commenter that including state DPAs and NPAs in the rule risks introducing inconsistency in the eligibility standards for related action awards as a result of the application of varying culpability and other standards under state law.33 DPAs and NPAs are long-established in DOJ practice, and their terms, conditions, and use have been subject to a great deal of transparency.34 But the Commission has limited insight into the practices of 50 state attorneys general (plus the District of Columbia’s) in entering into DPAs and NPAs, and we believe it would be administratively infeasible to establish consistent award standards if required, on a case-by-case basis, to determine whether any particular state DPA or NPA includes terms sufficiently similar to those that typify DOJ DPAs and NPAs such that the state instrument should also be deemed an “administrative action” that imposes ““monetary sanctions.” For this reason, new Rule 21F-4(d)(3) does not extend to DPAs or NPAs entered into by state attorneys general in criminal cases.

The rule we are adopting today includes settlement agreements similar to DOJ DPAs and NPAs entered into by the Commission outside of the context of a judicial or administrative proceeding. In our practice, these agreements have included key provisions typically analogous to those found in DOJ DPAs and NPAs that warrant also treating them as “administrative actions,” with the payments required under these agreements constituting “monetary sanctions.” Among the provisions that we deem important to our analysis are: (1) substantial continuing obligations on the part of the respondent (e.g., detailed and specific cooperation requirements and a requirement that any successors to the respondent be bound by the agreement); (2) specificity as to conduct that constitutes a violation of the agreement (e.g., further violations of the federal securities laws, provision of false information, and failure to make payments on the schedule and in the amounts due); (3) tolling of applicable statutes of limitations; and (4) clear and substantial consequences for default, including the respondent’s agreement not to contest or challenge the admissibility in a future enforcement action of factual statements supporting the Commission’s case that are recited as part of the agreement, as well as the respondent’s consent to the use of any documents, testimony, or other evidence previously provided by it in a future enforcement action resulting from its violations.

== Lessons Learned from SEC Whistleblower Award Determinations ==
The [https://www.zuckermanlaw.com/sp_faq/sec-whistleblower-program/ SEC Whistleblower Program] has issued more than [https://www.sec.gov/page/whistleblower-100million $1 billion in awards] to whistleblowers since 2012, which includes a '''multi-million dollar award to a client of Zuckerman Law.''' The [https://www.zuckermanlaw.com/sp_faq/largest-sec-whistleblower-awards/ largest SEC whistleblower awards] to date are $114 million, $110 million, and $50 million. [https://www.sec.gov/whistleblower/final-orders-of-the-commission The orders] announcing the awards, while sparse, offer critical guidance on how to: (1) recover an award; and (2) maximize the award percentage. These five lessons are drawn from those orders and our experience '''[https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ effectively representing SEC whistleblowers.]'''

== '''Tip #1: Establish a Material Violation''' ==
Many SEC whistleblower attorneys will incorrectly begin the analysis of a claim by determining a whistleblower’s eligibility for an award. This puts the cart before the horse. The first step in any successful whistleblower claim is to determine whether you can establish a material violation of federal securities law. In other words, can you show the SEC that your tip concerns a violation that is serious enough to warrant the use of its limited resources?

Whistleblowers have filed more than 40,200 tips with the SEC since August 2011. In a perfect world, the SEC would be able to investigate all legitimate tips and stop even immaterial violations. However, the SEC has limited resources, so it can pursue only the best tips. (See Tip #5 on how to get the SEC’s attention with your tip.)

If you have a hunch about a violation but lack any proof, then it may be worth investigating further, rather than submitting an incomplete or speculative claim to the SEC. Tips generally fall to the wayside unless they provide “specific” and “credible” information about a material violation of the federal securities laws. That said, if you have such information about a material violation, you will most likely want to submit your Form TCR as soon as possible (see Tip #3) unless you are required to take certain steps prior to submitting a tip in order to be eligible for an award.

== '''Tip #2: Quickly Determine Eligibility Because It May Affect Award Percentage''' ==
The next step in any successful whistleblower claim is to determine eligibility. This step follows a finding of a material violation because, while most individuals cannot establish a material violation, almost everyone can become eligible for an award, if certain steps are taken. Lawyers, external and internal auditors, and even individuals involved in the wrongdoing are among those who may be eligible for awards.

Analyzing an individual’s eligibility is complex. The analysis differs depending on the individual’s relation to the company and how the individual obtained the information. For example, auditors may report to the SEC and be eligible for an award if:

they have a reasonable basis to believe the disclosure is necessary to prevent conduct that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct”; or
at least 120 days have passed either since they properly disclosed the information internally, or since they obtained the information under circumstances indicating that the entity’s officers already knew of the information.
Auditors who obtained the information during their audit of an issuer, however, will be eligible for an award only if:

they have a reasonable basis to believe the disclosure is necessary to prevent “a material violation of the securities laws” that is likely to cause “substantial injury” to the financial interest or property of the entity or investors;
they have a reasonable basis to believe the entity is engaging in “conduct that will impede an investigation of the misconduct even if the submission does not contain an allegation of audit firm wrongdoing”; or
they report the securities-law violation to a superior in their independent public-accounting firm, and the firm fails to promptly report that information to the SEC.
Eligibility depends on various factors. If whistleblowers are uncertain about their eligibility, then they should consult with an experienced SEC whistleblower attorney. A skillful analysis may be the difference between a multimillion-dollar whistleblower award and no award at all.

== '''Tip #3: Act Fast''' ==
It is never too early to think about maximizing your potential award. Whistleblowers may receive anywhere from 10% to 30% of the monetary sanctions collected in actions brought by the SEC and in related actions brought by other regulatory or law enforcement authorities. And the timing of a whistleblower’s tip is a significant factor that the SEC considers in determining whether, and how much, to award.

To be eligible for an award, a whistleblower must first submit “original information.” Original information is any information that the SEC does not already have. Whistleblowers who wait to report information, therefore, risk that someone else will submit the same information to the SEC first. Keep in mind that even if the SEC has already opened an investigation, whistleblowers may still qualify for an award if their information “significantly contributes” to the success of an action.

Next, the whistleblower office may reduce the amount of an award if the whistleblower unreasonably delays reporting the violation to the SEC. About 20% of the awards issued through 2015 were reduced because of an unreasonable reporting delay. In making this determination, the whistleblower office considers:

whether the whistleblower failed to take reasonable steps to report the violation or prevent it from occurring or continuing;
whether the whistleblower was aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
whether there was a legitimate reason for the whistleblower to delay reporting the violation.
For example, on February 28, 2017, the SEC issued an order reducing an award to 20% of the monetary sanctions collected “because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission.”

Finally, to be eligible for an award, some whistleblowers must take certain actions (e.g., the 120-day exception for auditors under certain circumstances, see Tip #2) before reporting to the SEC. Whistleblowers should therefore understand and consider the specific eligibility requirements in determining when to report to the SEC.

== '''Tip #4: Know the Rules Before Filing with the SEC''' ==
Besides avoiding “unreasonable delay,” whistleblowers should be aware of other factors (see § 240.21F-6) that influence the size of awards. Whistleblowers must learn the rules early on because, as mentioned, some actions must be taken prior to filing with the SEC. For example, the whistleblower office may reduce the amount of an award if the whistleblower participated in the reported securities-law violation or interfered with the company’s internal compliance and reporting systems.

On the other hand, the whistleblower office may increase the amount of an award based on:

the tip’s significance to the success of any proceeding brought against wrongdoers;
the assistance that you and your legal representative provide in the SEC action or related action;
the SEC’s law-enforcement interest in deterring the specific violation; and
whether, and the extent to which, you participated in your company’s internal compliance and reporting systems.
Accordingly, whistleblowers have an incentive to report internally to their companies’ compliance personnel before going to the SEC. If whistleblowers choose to report internally, then '''they should also report the same information to the SEC within 120 days.''' That way, in evaluating a potential award, the SEC will consider the date of the internal report, rather than the date that the whistleblower reported to the SEC. As the SEC puts it, the whistleblower office will “hold your place in line.” This may determine, for example, whether a whistleblower submitted “original information.”

== '''Tip #5: Draft a Tip that Grabs the SEC’s Attention''' ==
The SEC Whistleblower Office is relatively small, and thousands of tips are submitted annually. According to the [https://www.sec.gov/files/2020%20Annual%20Report_0.pdf SEC’s Annual Report Congress on the Whistleblower Program], the office received 6,911 tips in fiscal year 2020. As such, SEC whistleblowers and their attorneys should tailor their tips to quickly grab the whistleblower office’s attention. While one could write a book on this section alone, here are a few “rules” to keep in mind when drafting submissions:

#Provide the SEC with a clear roadmap for a successful enforcement action. Do not submit a pile of documents and expect the whistleblower office to figure it out. Instead, walk the SEC, step by step, through specific and credible examples of the violation(s). A February 2020 [https://www.sec.gov/rules/other/2020/34-88299.pdf order awarding $7M to a whistleblower] recognized the whistleblower’s “extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.”
#Demonstrate how the violation is “material.” As mentioned, the SEC investigates only those violations that are serious enough to warrant the use of its limited resources. While demonstrating materiality, be sure to analyze the legal issues and tie them to the specific violations. This should include a discussion of potential challenges that the SEC may encounter and how the agency should address them.
#If possible, provide the whistleblower office with documentation of the violation. The SEC is much more likely to act on a tip that is supported by strong evidence. The SEC does not, however, want all types of evidence. For example, the SEC does not want information that may violate the company’s attorney-client privilege (e.g., documents, including emails, that involve advice from inside or outside counsel).

== '''Prevailing in a Retaliation Whistleblower Case With Prior Performance Problems''' ==
Every case is unique and the outcome of a case depends upon variety of factors, but a prior performance problem is not an insurmountable obstacle to prevailing in a [https://www.zuckermanlaw.com/legal-services/whistleblower-retaliation-and-whistleblower-protection-lawyers/ whistleblower retaliation case]. A whistleblower can prevail in a retaliation case even if they had a performance problem or problems prior to blowing the whistle. To prevail in a retaliation case, a whistleblower must show that 1) they engaged in protected activity, 2) their employer took an adverse employment action against them, and 3) the protected activity was a contributing factor to the adverse employment action. See Arnett v. Hilmar Cheese Co., 2018-CPS-00002 at 3 (ALJ Sep. 11, 2018) (citing various whistleblower statutes).

The contributing factor causation standard is favorable to whistleblowers. Under this standard, a whistleblower need only show that their engaging in protected activity in some way contributed to the employer taking an adverse action against them. A contributing factor is “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Id. (citing Tocci v. Miky Transp., ARB No. 15-029, ALJ No. 2013-STA-071 (ARB May 18, 2017)). If an employee proves that their protected activity was a contributing factor in their employer taking an adverse action against them, to avoid liability, the employer must show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity. Id. at 3-4 (citing 15 U.S.C.A. § 2087(b)(2)(B)(i)-(iv)).

In Arnett v. Hilmar Cheese Co., the ALJ denied the employer’s motion for summary judgment where it had disciplined the employee/whistleblower for repeated performance issues, including issuing him with multiple notices of corrective action. Id. at 4-5. In a coaching session with his supervisor, the employee became argumentative, reported that he did not believe the employer’s fume hoods were safe, and stated that he intended to verify their safety with OSHA. Id. at 2. His employer terminated his employment two days later. Id.

In a motion for summary judgment, the employer asserted that it would have terminated the whistleblower’s employment in the absence of his protected activity due to his repeated performance issues, which culminated in his “argumentative, combative, disrespectful, threatening, and insubordinate” behavior in the coaching session. Id. at 4-5. The ALJ, however, found that there was a genuine issue of material fact as to whether the disclosure about the fume hoods was a contributing factor in the whistleblower’s termination. Id. at 4. The ALJ emphasized that the temporal proximity of two days suggested that the protected activity may have been a contributing factor in the termination, even if the employer acted without retaliatory intent. Id. Further, the ALJ explained that the sooner an adverse action occurs after an employee engages in a protected activity, the more likely it is that the protected activity contributed to the adverse action. Id.

Finally, the ALJ stated that, based on the employer’s explanation of the facts, the employee’s behavior during the coaching session, where he became “argumentative . . . and insubordinate” did not seem to be particularly egregious or any worse than his prior conduct. Id. at 5. Therefore, the ALJ held that the evidence was insufficient to support the employer’s assertion that the report about fume hoods in no way contributed to the employee’s termination. Id. The ALJ concluded that without making a determination on the credibility of the parties involved, it was inappropriate to conclude that the employer had proven by clear and convincing evidence that it would have terminated the whistleblower in the absence of his protected conduct. Id.

In denying the employer’s motion for summary judgment, the ALJ confirmed that a whistleblower may prevail in a retaliation case even where they have had prior performance issues. While an employer may try to cite an employee’s performance as the basis for an adverse action, that employer must prove that the protected activity in no way contributed to the action. A whistleblower may prevail even where the employer has documented various and repeated performance issues; for the contributing factor causation standard only requires that the protected activity played some part in employer taking the adverse action. Especially where, as in Arnett, temporal proximity or another aspect of the case implies causation, an employee can still prevail.

== '''Submitting a Tip Anonymously to the SEC Office of the Whistleblower''' ==
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. Since 2012, the SEC has issued nearly $1 billion in awards to whistleblowers. Unlike other whistleblower-reward programs, the '''SEC’s program allows whistleblowers to submit tips anonymously if they are represented by an attorney.'''

Many SEC whistleblowers are uncertain about what '''exactly''' anonymous whistleblowing means. Indeed, for many whistleblowers, it is imperative that their identity remain confidential throughout the entire SEC whistleblower process.

Prior to submitting a tip to the SEC, whistleblowers should assess the risks entailed in whistleblowing and options to mitigate those risks.

Anyone can submit a tip anonymously if you have an [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ attorney] represent you in connection with both: (1) your submission of information; and (2) your claim for an award. According to an SEC Whistleblower Office’s Annual Report to Congress, almost a quarter of the award recipients reported anonymously to the SEC Office of the Whistleblower through an attorney.

== '''Attorney Submission of an Anonymous Tip to the SEC''' ==
The [https://www.zuckermanlaw.com/sec-whistleblower-program-sec-form-tcr/ Form TCR] (Tip, Complaint, or Referral) is the form SEC whistleblowers and their attorneys use to submit tips to the SEC Office of the Whistleblower. When a whistleblower submits a tip anonymously through an attorney, the whistleblower is not required to put his or her name on the form. Rather, the whistleblower’s attorney will provide their contact information and will be the SEC’s point of contact for the submission. In addition, the attorney will be required to, among other things, certify that they:

Reviewed the whistleblower’s submission for completeness and accuracy;
Verified the whistleblower’s identity by viewing his or her valid unexpired government-issued identification (e.g., driver’s license, passport);
Obtained the whistleblower’s consent to disclose his or her name to the SEC if there are concerns that the whistleblower may have knowingly and willingly made false statements or used false documents in the submission; and
Retain an original copy of the TCR, with Section F signed by the whistleblower.
Section F of Form TCR is the whistleblower’s declaration that the submission is “true, correct and complete to the best of my knowledge, information and belief.” Importantly, whistleblowers sign this declaration under the penalty of perjury. Whistleblowers should consult with their attorney if they have any concerns about the declaration.

== '''Potential Exposure in an Anonymous Submission''' ==
The documents or information contained in a whistleblower’s submissions could potentially expose a whistleblower’s identity. As such, whistleblowers and their attorneys should first assess whether the benefit of providing the evidence outweighs the risk of exposing the whistleblower’s identity. If a whistleblower chooses to provide the evidence, the whistleblower should explicitly identify it in Section D, Part 11 of the Form TCR and explain how the evidence could reveal the whistleblower’s identity if disclosed to a third party. Notably, even when a whistleblower submits potentially compromising evidence, the SEC is required to shield the whistleblower’s identity. Specifically, [https://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf Section 21F(h)(2) of the Exchange Act] requires, with certain exceptions, that the SEC “shall not disclose any information, including information provided by a whistleblower to the [SEC], which could reasonably be expected to reveal the identity of a whistleblower.” Thus, '''even when the SEC obtains evidence that could expose a whistleblower’s identity, the SEC is required to go out of its way to protect the identity of the whistleblower.'''

However, there are limits on the SEC’s ability to shield a whistleblower’s identity and in certain circumstances the SEC must disclose it to outside persons or entities. For example, in an administrative or court proceeding, the SEC may be required to produce documents or other information which could reveal a whistleblower’s identity. In addition, as part of the SEC’s ongoing investigatory responsibilities, the SEC may use information the whistleblower has provided during the course of its investigation. In appropriate circumstances, the SEC may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities.

'''Prior to submitting information to the SEC, whistleblowers should consult with an [https://www.zuckermanlaw.com/sp_faq/choose-best-whistleblower-attorney/ experienced SEC whistleblower law firm] to determine the appropriate steps to take to maximize the likelihood that their identity is protected throughout the process.'''

== '''Disadvantages to Submitting a Tip Anonymously''' ==
Anonymous whistleblowing offers many obvious benefits, such as protecting whistleblowers from retaliation or harm to their career. But there can be some minor disadvantages.

'''When Submitting the Form TCR'''

Disclosing fraud to the SEC anonymously may limit the type of evidence that can be provided to the SEC. For example, a whistleblower may be concerned that certain documents or information that prove the fraud may also reveal their identity. Whistleblowers must weigh the risk of exposing their identity to the SEC (as mentioned, the SEC is required by law to keep the information confidential) with the risk that the SEC will not act on their tip. Since 2011, the SEC Whistleblower Office has received more than 40,200 tips from whistleblowers. In fiscal year 2020 alone, the office received over 6,900 whistleblower tips. As the SEC has limited investigative resources, typically it will pursue a tip only where it receives specific, timely, and credible information about federal securities laws violations. In certain circumstances, a detailed and credible tip could potentially reveal the whistleblower’s identity to the SEC.

For example, a disclosure from a senior-level corporate insider, such as an executive, can lend credibility to the tip because senior company officials often know who at the company has authorized or facilitated a fraud scheme. But providing details about a whistleblower’s background or position within a company could expose the whistleblower’s identity. Again, the whistleblower should seek advice to weigh the risk of exposing their identity to the SEC against risk that the SEC will not act on their tip.

'''When the SEC Investigates a Whistleblower's Tip'''

If a whistleblower and the whistleblower’s attorney draft a tip that grabs the SEC’s attention, the SEC will often request to have a telephone interview with the whistleblower (who can remain anonymous or deny the request) or the whistleblower’s attorney to gain a better understanding of the federal securities laws violations. Furthermore, the SEC may request additional documents or information to confirm the alleged violations. If the SEC is persuaded by the interviews and information, it will assign the tip to one of its 11 Regional Offices, an Enforcement Specialized Unit, or an Enforcement Associate Director Group located in the SEC’s Headquarters.

Whistleblowers can be very helpful during this back-and-forth with the SEC, especially whistleblowers who have intimate knowledge and documentation of the violations. Notably, the SEC may increase a whistleblower’s award based on the assistance provided by a whistleblower. But responding to a request from the SEC for additional information could inadvertently reveal information that exposes the whistleblower’s identity.

'''Disclosing the Identity of the Whistleblower'''

Whistleblowers will only have to disclose their identity to the SEC at the end of the whistleblowing process when applying for an award. (Note: The SEC will not disclose the whistleblower’s identity publicly, even at the time of announcing an award, e.g., see the SEC Office of the Whistleblower’s Final Orders for award determinations.) In the application for an award, known as the Form WB-APP, the whistleblower must disclose his or her identity to the SEC so that the Commission can determine whether the whistleblower is “eligible” for an award under the program. Certain whistleblowers, such as key compliance personnel, are not eligible for awards, unless an exception applies.

In summary, the SEC Whistleblower Program offers whistleblowers the opportunity to disclose information anonymously and there are safeguards in place throughout the process to protect whistleblower confidentiality. But in certain circumstances, revealing a whistleblower’s identity to the SEC can increase the likelihood that the SEC will pursue the tip.

== '''Confidentiality Applies to Other Government Agencies''' ==
If the SEC shares the whistleblower’s submission with another agency, such as informing the Department of Justice of a [https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Foreign_bribery_and_FCPA_violations Foreign Corrupt Practices Act (FCPA)] violation, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A).

== '''10-Step Summary of the SEC Whistleblower Process''' ==
Below is a 10-step summary of the SEC whistleblower process. Please note this is a general overview that does not address a multitude of considerations that whistleblowers and their attorneys should consider during the process. Whistleblowers should contact an experienced SEC whistleblower attorney for a detailed, fact-specific analysis of the process as it relates to their claim and potential whistleblower award.

{| class="wikitable"
|
|-
! Step !! Summary
|-
| 1. Submit a Tip to the SEC || To qualify for an award under the SEC Whistleblower Program, whistleblowers must submit tips regarding violations of federal securities laws via the SEC’s TCR Portal or by mailing/faxing a Form TCR. The SEC evaluates tips based on specificity, credibility, and timeliness.
|-
| 2. Tip Analysis/Investigation || The SEC’s Office of Market Intelligence reviews whistleblower tips, forwarding those that warrant investigation. Whistleblowers may be interviewed, and investigations are conducted confidentially.
|-
| 3. SEC Enforcement Action || Some tips lead to enforcement actions, where monetary sanctions may exceed $1 million.
|-
| 4. Notices of Covered Actions Posted || Each month, the SEC posts Notices of Covered Actions for enforcement cases resulting in sanctions over $1 million.
|-
| 5. Submit an Application for an Award || Whistleblowers have 90 days to apply for an award by submitting Form WB-APP, explaining their contribution to the enforcement action.
|-
| 6. Preliminary Award Determinations Issued || The SEC Office of the Whistleblower reviews award applications and issues preliminary determinations, considering factors like provided evidence and cooperation.
|-
| 7. Contesting a Preliminary Determination || Whistleblowers can contest preliminary determinations within 60 days by requesting a review and providing additional documentation.
|-
| 8. Final Orders Issued/Resolution of Appeals || If an appeal is made, the SEC reviews the case. If no Commissioner requests a review within 30 days, the determination becomes final.
|-
| 9. Awards Issued from Investor Protection Fund || Award payments are made from a fund established by the Dodd-Frank Act, sourced from monetary sanctions imposed on securities law violators.
|-
| 10. Appealing the SEC’s Final Orders || If an award is denied, whistleblowers may appeal the decision in a U.S. Court of Appeals within 30 days.
|}

== '''Employment Protections Available for SEC Whistleblowers''' ==
The '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws#Dodd-Frank_Act Dodd-Frank Act]''', which created the SEC Whistleblower Program, prohibits retaliation against whistleblowers for raising concerns about potential securities law violations. Remedies for a prevailing whistleblower include reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

Retaliation for whistleblowing to the SEC is also proscribed by the whistleblower protection provision of the '''[https://whistleblower-rewards-and-protections-wiki.zuckermanlaw.com/index.php/Whistleblower_Protection_Laws Sarbanes-Oxley Act (“SOX”)]'''. The remedies are similar to those under Dodd-Frank, but SOX also includes special damages, such as emotional distress, impairment of reputation, and other noneconomic harm resulting from retaliation. Click [https://www.zuckermanlaw.com/sec-whistleblower-retaliation-tools-to-combat-retaliation-and-protect-sec-whistleblowers/ here] for information about additional options to combat retaliation against SEC whistleblowers.

== '''Largest SEC Whistleblower Awards''' ==
Since 2012, the SEC has issued more than $1 billion in SEC whistleblower awards, which includes several awards to our clients. In 2020 alone, the SEC issued five of the top SEC whistleblower awards, totaling more than $241 million. [https://www.zuckermanlaw.com/sec-whistleblower-lawyers/ The largest SEC whistleblower awards] to date are:

*$114 million SEC whistleblower award (October 22, 2020)
*$110 million SEC whistleblower award (September 15, 2021)
*$50 million SEC whistleblower award (April 15, 2021)
*$50 million SEC whistleblower award (June 4, 2020)
*$50 million SEC whistleblower award (March 19, 2018)
*$39 million SEC whistleblower award (September 6, 2018)
*$37 million SEC whistleblower award (March 26, 2019)
*$33 million SEC whistleblower award (March 19, 2018)
*$30 million SEC whistleblower award (September 22, 2014)
*$28 million SEC whistleblower award (May 19, 2021)
*$28 million SEC whistleblower award (November 3, 2020)
*$27 million SEC whistleblower award (May 17, 2021)
*$27 million SEC whistleblower award (April 16, 2020)
*$23 million SEC whistleblower award (June 2, 2021)
*$22 million SEC whistleblower award (May 10, 2021)
*$22 million SEC whistleblower award (September 30, 2020)

Under the SEC whistleblower-reward program, the SEC is required to issue awards to eligible whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

== '''International Schemes and SEC Enforcement Actions''' ==
The SEC’s reach against fraudsters extends internationally. The antifraud provisions of the federal securities laws apply extraterritorially:

#When the wrongful conduct '''occurred''' in the United States; or
#When the conduct outside the United States had a '''substantial effect''' in the United States or upon United States citizens.

This is known as the “conduct-and-effects” test. Courts have applied this test for over 40 years notwithstanding the fact that the federal securities acts of 1933 and 1934 did not address the extraterritorial reach of the antifraud provisions of those statutes. On June 24, 2010, the Supreme Court of the United States held in Morrison v. Nat’l Australia Bank Ltd. that the lower courts were wrong to apply the conduct-and-effects test. Then, less than a month after the Morrison decision, Congress enacted the Dodd-Frank Act, which amended the jurisdictional provisions of the federal securities acts to clearly indicate that the anti-fraud provisions apply extraterritorially when the statutory conduct-and-effects test is met.