The U.S. Securities and Exchange Commission (SEC) Whistleblower Program was created by Congress in 2010. It came into effect on July 21, when the President signed the Consumer Protection Act and the Dodd-Frank Wall Street Reform into law.
The section 922 of the Dodd-Frank Reform amended the Securities Exchange Act of 1934 by adding Section 21F, which created the SEC Whistleblower Program and the SEC Whistleblower Office. These programs have so far enabled the SEC to recover about $1 billion in financial penalties from violators.
The Whistleblower Program is designed to provide monetary rewards for individuals who can offer SEC tips involving the violations of federal securities laws. The program in March 2018, awarded a whistleblower more than $33 million in reward, the largest single award in the seven years since the commencement of the program.
The chief of the SEC’s whistleblower office, Jane Nirberg believes that the monetary awards would entice more individuals to provide valuable information to the SEC regarding violations that may have otherwise gone unnoticed.
According to the law, eligible whistleblowers are entitled to an award of 10 to 30 percent of the monetary sanctions received from the perpetrator of the reported act. So far, as reported on the SEC official website, the office of the SEC Whistleblower has awarded more than $262 million to 53 whistleblowers.
In regards to the whistleblower policy, an individual is considered eligible if he/she voluntarily provides the SEC with original information about a possible violation that has already happened or is about to happen. The information is expected to result in a monetary sanction exceeding $1 million. The Program also allows individuals or organizations to report cases anonymously.
Whistleblowers are usually advised to get an attorney for the ease of claiming their reward. Labaton Sucharow is one of the leading whistleblower advocates. The firm has well-known attorneys who have a lot of experience in SEC-related cases.
To better protect the identity of whistleblowers, the Sarbanes-Oxley Act was created especially for individuals who report a cyber breach related to alleged mail, bank, wire or security fraud. The act also covers whistleblowers who report delayed notification of major cyber events, and alleged violations of the U.S. Securities and Exchange Commission’s (SEC) rules and regulation.
Whistleblowers’ employers may not discharge, demote, suspend, harass, or in any way discriminate against them because of any lawful act that was done to provide information to the SEC whistleblower program.