A strong tip about securities fraud is only the start. The SEC whistleblower program may offer financial awards to people whose information helps the agency bring a successful enforcement action, but the program has detailed rules for qualifying, reporting information, and claiming an award. Strong evidence may not save your claim if you don’t follow those rules. 

A whistleblower lawyer can help you navigate the process and avoid mistakes that could jeopardize an award.  

 Key takeaways 

• A strong tip is not enough on its own. An award also depends on following the SEC whistleblower program’s rules. 

• How and when you report matters. Mistakes in filing or missed deadlines can jeopardize an award. 

• You have choices about how to report. You may be able to report anonymously or internally first, but those choices come with different rules. 

Start with the basic award rules

To qualify for an SEC whistleblower award, you generally must voluntarily provide original information that leads to a successful enforcement action. If the SEC recovers more than $1 million in monetary sanctions in a covered action, eligible whistleblowers can receive 10% to 30% of the amount collected. 

Two of those requirements are important to explain up front: 

• “Voluntary” generally means you provided the information before the SEC or certain other authorities asked you for it. 

• “Original information” generally means information based on your independent knowledge or analysis that the SEC did not already know from another source, subject to exceptions. 

Use Form TCR and follow the filing rules

To be considered for an award, you must submit your information through the SEC’s process, using Form TCR (which stands for Tip, Complaint, or Referral). No matter how useful your tip is, you can jeopardize your eligibility for an award by failing to follow the SEC’s filing rules. The goal is to help SEC staff see both the misconduct and why your tip matters, without overstating what the evidence proves. 

Protect your anonymity the right way

You can submit an anonymous tip to the SEC, but you must be represented by a lawyer to do so. The SEC does not initially receive your name. Instead, your lawyer verifies your identity and keeps your signed Form TCR certification. If you later qualify for an award, you must disclose your identity to the SEC before you can receive it. 

If you choose to file without a lawyer or otherwise identify yourself in a report to the SEC, your identity is protected by the agency’s confidentiality requirements. Subject to some exceptions, the law generally restricts the agency from disclosing information that could identify you, subject to certain exceptions. Even so, the facts of a case can make it possible for others to figure out who you are. 

Internal reporting can help, if you do it right

Reporting suspected misconduct inside your company to a compliance officer, human resources official, or supervisor can help your SEC whistleblower claim, but internal reporting alone will not qualify you for an award. You still need to report your information to the SEC. 

If you report internally, then give the same information to the SEC within 120 days, the SEC may credit you with the date of your internal report for certain purposes. This can matter if someone else reports the same information to the SEC in the meantime. 

Reporting inside the company may also affect the amount of an award. The SEC may increase an award based on a whistleblower’s participation in an employer’s internal compliance or reporting system, while interference with that system can count against the whistleblower. Whether to report internally first, however, depends on the circumstances, particularly if you are concerned about retaliation, destruction of records, or the involvement of senior leaders. 

Keep evidence carefully and lawfully

Records can help support your tip, but that does not mean you should take everything you find in your company’s systems. Privileged communications, customer data, trade secrets, medical records, and files you are not authorized to access can raise legal issues. Avoid mass downloads or accessing materials you are not allowed to see. 

Instead, start by writing down what happened and where supporting records can be found. Keep your own messages and employment records, but don’t alter documents or use consumer AI tools to review confidential company information. A lawyer can help you determine what evidence you can lawfully use. 

Watch for the award claim deadline

Reporting the violation to the SEC is not the last step. If the SEC later brings a qualifying case, you have to make a separate claim for the award, and there is a deadline. 

After a qualifying enforcement action, the SEC posts a Notice of Covered Action to its website. You generally have 90 days after announcements to file your claim. Missing that deadline can put your award at risk. 

The amount of an award depends in part on how significant your information was and how much you helped the SEC. The agency may also consider whether you reported promptly and participated in your employer’s internal compliance process.  

Early advice can make a difference

Reporting securities violations involves more than deciding whether something looks wrong. An experienced whistleblower lawyer can help you determine whether the conduct may violate securities laws, whether your information may qualify for an award, and how to report it without jeopardizing your rights. 

To learn more, visit Outten & Golden’s SEC Whistleblowing & Financial Fraud Reporting practice page. You can also read our earlier article on how talking to the media cost a whistleblower millions. 

This article is provided for general informational purposes only. It is not legal advice and may not reflect the most current law or apply to your facts or jurisdiction. Reading this article or using this website does not create an attorney-client relationship with Outten & Golden LLP. You should consult a qualified attorney about your specific situation.