In our web site, we established the types of anti-retaliatory protections
offered employees under the SEC Whistleblower Program.
A question constantly heard is how does an employee optimize or receive the
full benefit of these protections?
Here are some of the specific rules proposed by the SEC
on qualfiying whistleblowers seeking protection and/or a reward.
Potential vs. Proven Securities Fraud
The SEC Whistleblower Program protects employees who
report "potential" corporate misconduct. But it's imperative to understand that
"potential" does not mean "proven," "actual," "provable," or even
"interesting-to-the-SEC". Should an employee need to invoke the protections
afforded to him or her, he or she will not need to prove that underlying
misconduct occurred. That person only needs to prove corporate misconduct
using the appropriate forms to the SEC.
Accrues to employee upon submission to SEC
The anti-retaliatory protections of the SEC Whistleblower
Program accrue to an employee when that employee reports information to the
SEC. It is not relevant where the SEC is in its investigation or whether the
SEC intends to investigate the matter at all. Again, it is the proper reporting
of potential corporate misconduct that triggers the whistleblower protections, not
the investigation the report may or may not generate.
Qualifying for protection verses qualifying
for a reward
Much of the statute creating the SEC Whistleblower
Program and much of the energy the SEC is expending creating qualifications for
the program deal with who can be entitled to receive a reward, not who is
entitled to protection from retaliation. Certain types of compliance officers
and senior executives may not qualify for a reward, but some attorneys and
auditors may not. The information must be provided voluntarily to receive a
reward. This type of analysis deals with who qualifies for a reward, not who
qualifies for protection from retaliation.
While the distinction is still unsettled at this time, it
seems clear that a larger group of employees and individuals will qualify for
whistleblower protection, even though some of those employees may not qualify
for a reward.
Learn more about SEC Whistleblower Qualifications
to better understand if you're eligible for whistleblower protection and/or a
Read more articles about corporate fraud and
whistleblower issues at the SEC Whistleblower Blog
For More Information:
Whistleblowers are discussed in
greater detail in 2 A.A. Sommer Jr., Federal Securities Exchange Act
of 1934 Sec. 9.12 (Matthew Bender Rev. Ed.), "Specialized Treatment of
Illicit Insider Trading," which can be accessed online by subscribers of lexis.com. This
treatise is also available in the LexisNexis online store.