SEC Whistleblower Program Explained: How It Works & Benefits //

The SEC Whistleblower Program (“SEC Whistleblower Program”) was established by Congress to incentivize whistleblowers to report specific, timely and credible information about possible federal securities laws violations.

Whistleblowers who provide original, high-quality information that leads to a successful enforcement action may be eligible for financial rewards ranging from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.

In May 2023, the U.S. Securities and Exchange Commission (“SEC”) announced the largest-ever award, nearly $279 million, to a whistleblower whose information and assistance led to the successful enforcement of SEC and related actions. This is the highest award in the SEC’s whistleblower program’s history, more than doubling the $114 million whistleblower award the SEC issued in October 2020.

In FY 2024, the SEC awarded over $255 million to 47 whistleblowers, marking the third-highest annual total in the program’s history.

According to the SEC Office of the Whistleblower Annual Report to Congress for FY 2024, more than $2.2 billion has been awarded by the SEC to 444 individual whistleblowers since the SEC Whistleblower Program’s inception in 2011.

Whistleblower Confidentiality

Confidentiality is a cornerstone of the SEC Whistleblower Program. Under the Dodd-Frank Act, the SEC is prohibited from disclosing any information that could reasonably be expected to reveal a whistleblower’s identity, except under limited circumstances.

To protect whistleblowers, the SEC redacts identifying details from public award orders, including names, enforcement action details, and award percentages.

Who Can Be a Whistleblower?

Anyone with credible, original information about violations of federal securities laws can be a whistleblower. This includes employees, investors, industry insiders, and others who witness misconduct.

The SEC allows anonymous reporting if the whistleblower is represented by an attorney.

Even individuals involved in the misconduct may be eligible for an award, though their participation could impact the reward amount.

Whistleblowers can be either insiders (such as current or former employees of the violating entity) or outsiders (such as investors, competitors, or market analysts). In FY 2024, 38% of whistleblowers who received awards were outsiders, while 62% were insiders.

What Information Can I Submit to the SEC?

The SEC investigates possible violations of federal securities laws. The more specific, credible, and timely a whistleblower tip, the more likely it is that the tip will be forwarded to investigative staff.

High-quality tips include:

• Identifying individuals involved in the scheme
• Providing examples of fraudulent transactions
• Submitting non-public materials evidencing fraud

The SEC does not have jurisdiction over matters outside federal securities laws but may refer cases to other regulatory agencies when appropriate.

Examples of misconduct the SEC investigates include:

• Ponzi schemes, pyramid schemes, or high-yield investment programs
• Theft or misappropriation of funds or securities
• Manipulation of a security’s price or volume
• Insider trading
• Fraudulent or unregistered securities offerings
• False or misleading statements about a company (including SEC reports or financial statements)
• Abusive naked short selling
• Bribery of, or improper payments to, foreign officials
• Fraudulent conduct associated with municipal securities transactions or public pension plans
• Initial Coin Offerings and cryptocurrency fraud

Independent Knowledge and Independent Analysis

To be eligible for an award, whistleblowers must provide “original information” derived from either:

• Independent knowledge – Firsthand, non-public information obtained through personal experiences, observations, or communications.
• Independent analysis – Examining publicly-available data in a way that uncovers previously unknown violations.

In FY 2024, the SEC granted four awards based on independent analysis and 37 awards based on independent knowledge.

Protections for Whistleblowers

The SEC Whistleblower Program provides strong protections against employer retaliation.

Employers cannot fire, demote, suspend, or harass employees for reporting violations. Whistleblowers who experience retaliation may have legal recourse, including job reinstatement and compensation for damages.

How to Report Securities Fraud to the SEC

To report fraud under the SEC Whistleblower Program:

1. Gather Evidence – Collect documents, emails, or records supporting your claim. The SEC values high-quality, original information.
2. Submit a Tip – Use the SEC’s Tips, Complaints and Referrals Portal or Form TCR (Tip, Complaint, or Referral). A properly submitted Form TCR is required for a whistleblower award.
3. Work with an Attorney – An experienced whistleblower attorney can guide you and protect your rights. Whistleblowers wishing to remain anonymous must be represented by an attorney.
4. Stay Updated – The SEC may contact you for additional information or updates on your case. Continued cooperation may maximize award chances.

Determining Whistleblower Awards

The SEC determines award percentages based on several factors:

Factors That May Increase an Award:

• Significance of Information – More valuable information leads to higher awards.
• Assistance Provided – Helping SEC staff decipher transactions or provide key evidence can increase awards.
• Law Enforcement Interest – Reports of ongoing violations harming investors may receive priority.
• Internal Compliance Participation – While not required, internal reporting can increase award percentages.

Factors That May Decrease an Award:

• Unreasonable Reporting Delay – Waiting too long to report a violation may reduce the award.
• Culpability – Whistleblowers involved in misconduct may receive reduced payouts.
• Interference with Internal Reporting Systems – Undermining internal compliance may lower an award.

Maximum Whistleblower Award Presumption

Under the 2020 Whistleblower Rule Amendments, whistleblowers are presumed eligible for the maximum 30% award if:

• The total award does not exceed $5 million.
• The claimant has no negative factors (e.g., culpability or delay).
• The claim does not involve whistleblowers engaged in misconduct.

In FY 2024, the SEC applied this presumption in 90% of cases where the maximum award was $5 million or less.

Why Report Securities Violations?

By participating in the SEC Whistleblower Program, individuals help combat fraud, hold violators accountable, and protect investors. With over $2.2 billion awarded to 444 whistleblowers since 2011, the program plays a critical role in exposing wrongdoing.

If you have information about securities fraud, consider consulting a legal professional before submitting a tip.

Learn more about the SEC Whistleblower Program by visiting the SEC’s official Whistleblower FAQ page.

Do You Have Questions or Concerns About Whistleblower Reporting of Securities Fraud to the SEC?

Making the decision to come forward as a whistleblower and report securities fraud to the SEC can be challenging. At Kehoe Law Firm, P.C., our legal team understands the complexities involved and has extensive experience investigating fraud, prosecuting wrongdoing, and working with individuals who bravely expose securities violations.

If you have questions about voluntarily providing information to the SEC as a whistleblower—whether regarding eligibility for a whistleblower award, the reporting process, or the required submission format—please contact Kehoe Law Firm, P.C.

To speak directly with an attorney and receive a free, no-obligation legal consultation, please contact:

Michael Yarnoff, Esq. – [email protected], [email protected] | (215) 792-6676, Ext. 804, or
John Kehoe, Esq. – [email protected], [email protected] | (215) 792-6676, Ext. 801.

Your courage in whistleblower reporting of securities fraud helps protect investors and uphold market integrity. Kehoe Law Firm is here to guide you every step of the way.

About Kehoe Law Firm, P.C.

Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action law firm dedicated to protecting investors and consumers from fraud and misconduct. Our attorneys have served as Lead or Co-Lead Counsel in major securities cases, recovering over $10 billion for institutional and individual investors. We litigate securities fraud, fiduciary breaches, unfair mergers and acquisitions, and antitrust violations, while also representing whistleblowers and advocating for victims of data breaches, consumer fraud, vehicle defects, employment law violations, retirement plan mismanagement, and other corporate and business misconduct. With a results-driven approach, we pursue justice and substantial recoveries for those we represent.

KLF’s class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses. 

PHONE

Tel: 215-792-6676

EMAIL

[email protected]

In an E-Rate fraud case brought under the False Claims Act (“FCA”) against Wisconsin Bell, the U.S. Supreme Court (“USSC”) recently ruled in favor of Todd Heath (“Heath”), in a significant decision which underscores the role of whistleblowers in exposing E-Rate fraud and enforcing accountability in federally managed funds.

What is the E-Rate Program?

The E-Rate (Education-Rate) program, established by the 1996 Telecommunications Act, helps schools and libraries afford internet and telecom services by drawing from the Universal Service Fund (“Fund”).

Telecom carriers contribute to the Fund, which is administered by the Universal Service Administrative Company, a nonprofit designated by the Federal Communications Commission (“FCC”) to oversee collections and distributions in accordance with FCC regulations.

A key regulation, the “lowest corresponding price” rule, ensures carriers do not charge schools and libraries more than comparable non-residential customers.

Whistleblower Lawsuit Against Wisconsin Bell

Heath, a telecommunications auditor, filed a lawsuit against Wisconsin Bell under the FCA, alleging that the company overcharged schools in violation of this rule and then submitted inflated reimbursement requests to the Fund, thereby defrauding the program.

The FCA imposes civil liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim” as statutorily defined. 31 U.S.C. §3729(a)(1)(A).

Wisconsin Bell’s Defense & Lower Court Rulings

Wisconsin Bell argued that these reimbursement requests did not qualify as FCA “claims” because the money originated from private carrier contributions rather than the government. However, courts, including the Seventh Circuit, rejected this argument, noting that the government played a direct role in regulating the Fund’s collection and distribution.

Additionally, the government contributed more than $100 million directly from the U.S. Treasury, sourced from enforcement penalties and related actions.

Because these government funds were deposited into and disbursed from the Fund, the courts determined that E-Rate reimbursements qualified as FCA “claims,” allowing Heath’s lawsuit to proceed.

To read the USSC opinion, Wisconsin Bell, Inc. v. United States ex rel., click E-Rate fraud. 

Impact on Whistleblowers & Fraud Enforcement

The USSC’s decision reinforces the False Claims Act’s role in protecting federal programs and highlights the critical role of whistleblowers in identifying and exposing fraud against the government. 

Whistleblowers: Know Your Rights 

Kehoe Law Firm is dedicated to protecting whistleblower rights, guiding them through the legal process, and pursuing potential financial rewards for reporting fraud.

For a free, no-obligation evaluation of whistleblower claims, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected]. 

KLF’s class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses. 

About Kehoe Law Firm, P.C.

Kehoe Law Firm, P.C. is a plaintiff-side class action firm, fiercely committed to safeguarding investors and consumers from corporate fraud and misconduct. Nationally recognized, our attorneys have taken the reins as Lead or Co-Lead Counsel in high-profile cases, securing over $10 billion in recoveries for institutional and individual investors and consumers. Through relentless class action litigation, we tackle securities fraud, fiduciary breaches, unfair mergers and acquisitions, and antitrust violations head-on. Beyond that, we champion whistleblowers and fight against data breaches, consumer scams, employment law abuses, retirement plan mismanagement, and deceptive business practices. With a no-nonsense, results-focused approach, we chase down meaningful outcomes—delivering justice and substantial recoveries for those we represent.

PHONE

Tel: 215-792-6676

EMAIL

[email protected]