Although it is still relatively young, the U.S. Securities and Exchange Commission (SEC) Whistleblower Program has grown exponentially over the past five years. Despite the growing number and size of whistleblower awards, it is not always clear what makes a good whistleblower case. What is an SEC whistleblower? Who qualifies as one? What kind of information is the SEC looking for in its investigations? In this video, Katz, Marshall & Banks partner David J. Marshall provides some of the basics regarding what it takes for an individual to qualify for an SEC whistleblower award and how effective representation can help whistleblowers increase their potential to win a substantial award from the SEC. For those interested in learning more about the mechanics of the SEC Whistleblower Program, read Mr. Marshall’s comprehensive SEC Whistleblower Practice Guide.
What is the SEC Whistleblower Program?
The Securities and Exchange Commission’s whistleblower incentive program provides rewards to individuals who come forward to the Commission with information about serious violations of the nation’s securities laws. The federal securities laws govern a wide range of behavior and are designed to protect investors in the financial markets. The laws govern the trading of stocks and bonds and other securities as well as disclosures that publicly traded companies make to their own shareholders and to potential investors about their financial condition.
If you have information about securities laws violations and you provide that information to the SEC and the SEC uses your information to take enforcement action against the wrong doer that results in more than a million dollars in sanctions, then you, as the whistleblower, are entitled to a financial reward under the program of between ten to thirty percent of the amount recovered. Some of these rewards to date have been very substantial.
What kinds of clients does Katz, Marshall & Banks represent before the SEC?
Our clients that we've represented before the Securities and Exchange Commission's whistleblower program have provided a wide range of information to the Commission. We have had clients who have come forward with information about public companies manipulating their earnings and other financial numbers. Cooking the books in effect to hide their declining financial condition from their shareholders.
We've had other clients who have provided information to the SEC about the misconduct of financial advisors and securities brokers who have been misusing the funds that their clients have entrusted them to invest on the client's behalf.
And we've had clients who have provided information to the Commission about public companies in this country who have paid bribes to foreign officials to be able to obtain or keep business in other countries.
All of these types of misconduct represent serious violations of the nation’s securities laws and could be a basis for a viable tip to the SEC that could lead to a potential award for the whistleblower.
What does Katz, Marshall & Banks do for its SEC whistleblower clients?
When clients come to us with information to present to the SEC as a whistleblower tip, they can expect us to take a number of steps on their behalf.
First of all, we painstakingly work up their information in the form required by the SEC and we present the content in a manner that the SEC staff can understand easily and use as the basis for a successful enforcement action.
Second, we represent our clients at all stages of any investigation that follows by the SEC or by any other agency like the Department of Justice that's working in collaboration with the SEC.
And finally, if the SEC takes enforcement action that results in more than a million dollars in sanctions and if they have used our client’s information, then we represent our client in claiming an award that they are due in the amount of ten to thirty percent of these sanctions the SEC recovers.
What sets Katz, Marshall & Banks apart from other firms practicing in this area?
The attorneys at Katz, Marshall & Banks have represented whistleblowers in many different industries nationwide for decades. And for this reason, we are particularly attuned to the individual needs of each of our clients.
We not only represent them and seek awards through the SEC program, but we are also careful to protect them to the extent we can against the retaliation that they might suffer on the job for having reported their employers for securities violations. And in claiming for them the compensation that they’re due if they do get retaliated against by their bosses.
In addition, we work carefully with the SEC staff to ensure that our clients enjoy the anonymity that they went into the SEC program as whistleblowers expecting and to which they are entitled under the program rules.
And finally, all along the way throughout working up their tip throughout the investigation that we represent them, and in claiming an award, we think of the pros and cons of every step that we might take on our client's behalf. We discuss all of this through with our client and try to advance the SEC’s investigation and action towards a successful conclusion that can result in an award for our clients.
What should I do if I have information I’d like to report to the SEC?
If you have information that you believe should be reported to the SEC, then give us a call and we'll discuss with you whether the information that you have might be the basis of a viable tip to the SEC and possibly a very lucrative financial reward.