Three Vital Tips for SEC Whistleblowers

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The SEC whistleblower program gives various awards to qualified whistleblowers who collect and provide authentic information that can be used to conduct a successful SEC action enforcement that has a total civil penalty above $1 million. Whistleblowers can receive between 10%t-30% of the monetary sanctions collected. These financial sanctions are as a result of SEC and other related actions brought by law enforcement agencies.

For those individuals seeking to have representation in SEC whistleblower awards, check out the following SEC tips for more information.

Set Up a Material Violation

Most SEC whistleblower lawyers begin the analysis of a claim incorrectly by finding out the award eligibility of a whistleblower. By doing so, the cart will be set before the horse. For a whistleblower to have a successful claim, first, you ought to find out if you can establish a material violation of the securities law. What this means is that, using your tip, you can prove a serious violation that can warrant the utilization of its minimum resources.

Determine Eligibility Fast Enough Since it Can Impact Award Percentage

The next step includes determining eligibility for a successful claim. This step comes after you have found material violation due to various reasons. For instance, many individuals may not be able to present material violation, but almost everyone is eligible for the award, with careful adherence to some steps. Furthermore, external auditors, lawyers, or individuals mentioned in the wrongdoing may comprise the list of those eligible for awards.

Moreover, determining a persons eligibility is complicated. This determination may greatly vary upon the relationship the individual has with the company, and how the information was obtained. For instance, financial auditors can report to the SEC and be eligible for an award if:

  1. Have enough evidence to believe that the disclosure is necessary to avert cases that can lead to possible injury to the financial interest or property related to investors or a business entity.
  2. They believe without a doubt that the business entity is involved in a practice that can impede an audit of the misconduct

Act Fast

You need to act fast to maximize your potential award. Whistleblowers can receive between 10-30 percent of the collected monetary sanctions. The SEC considers the timing of a whistleblowers tip as a crucial factor in determining the amount to be awarded.

For eligibility, the whistleblower needs to provide original information that the SEC does not possess. Do not wait to submit the report as someone else might rush and file before you even have a chance.

Furthermore, when the whistleblower considerably delays the information reporting to SEC, the amount of the award can be reduced. In 2015, about 20% of the awards given were cut due to unreasonable reporting delays.