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SEC Whistleblower Retaliation Protection

Whistleblowers & The SEC Whistleblower Program

This article addresses how whistleblowers under the SEC Whistleblower Program are protected from being discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against, because he or she reported a violation internally and/or to the Securities and Exchange Commission ("Commission" or "SEC").

Types of Fraud SEC Whistleblowers Can Report

Section 21F of the Securities Exchange Act of 1934 ("Exchange Act") (15 U.S.C. 78u-6), entitled "Securities Whistleblower Incentives and Protection," requires the Commission to pay awards, subject to certain limitations and conditions, to whistleblowers who provide the Commission with original information about violations of the federal securities laws.

The SEC Whistleblower Program was not established for whistleblowers to report to the Commission fraud against the government, which is the subject of the False Claims Act. Instead, SEC whistleblowers are to report violations of federal securities laws, violations of the rules of a self-regulatory organization (such as FINRA), or violations of the Foreign Corrupt Practices Act (which concerns allegations related to bribery of foreign officials).

SEC Whistleblower Awards

Whistleblowers may receive at least 10 percent and no more than 30 percent of the monetary sanctions that the Commission and other authorities are able to collect. 17 CFR 240.21F-5. To be eligible to receive an award, a whistleblower is not required to report the violations internally at the company where he or she is employed. Although, if a whistleblower does report internally, he or she must report the information to the Commission within 120 days thereafter to be eligible for an award. The award may be increased if the violations were, in fact, reported internally.

In the Frequently Asked Questions of the SEC Whistleblower website, the Commission specifically states that the award may be increased depending, among other factors, "Whether, and the extent to which, you participated in your company's internal compliance systems, such as, for example, reporting the possible securities violations through internal whistleblower, legal or compliance procedures before, or at the same time, you reported them to us."[1].

Click here to read more about whistleblower payouts under the Dodd-Frank Act.

How SEC Whistleblowers are Protected From Employer Retaliation

There is always the risk that a whistleblower's employment will be terminated if he or she reports internally, or if it becomes discovered that he or she reported to the SEC.  In response to this risk, the SEC whistleblower provisions of Dodd-Frank specifically protect whistleblowers from retaliation.

Read more about whistleblower anti-retaliation protection here.

Types of SEC Whistleblower Retaliation Protection

For any type of retaliation for: (1) reporting to the Commission, (2) assisting the Commission in any investigation, or (3) proceeding based on the information reported or making disclosures that are required or protected under any law, rule, or regulation subject to the jurisdiction of the Commission (including the Sarbanes-Oxley Act of 2002 [2]), the SEC whistleblower provisions of Dodd-Frank protect whistleblowers from retaliation (including being discharged) in two ways.  See Section 21F(h)(1) of the Exchange Act (15 U.S.C. 78u-6(h)(1))

SEC Whistleblower Protection Under Dodd-Frank

  1. A whistleblower who has been retaliated against in violation of Dodd-Frank may bring his own private action in federal district court. See Section 21F(h)(1) of the Exchange Act (15 U.S.C. 78u-6(h)(1)(B)(1)) The Statute of Limitations is 3 years from the date of the retaliatory action. An employer who is found liable will be ordered to reinstate the employee to the position previously held, or to a similar position. Additionally, the employer may be required to compensate the employee for two times the back pay. The employee may also be entitled to compensation for expenses incurred during the litigation process, such as witness' and attorneys' fees and other costs
  2. The SEC can bring its own enforcement action against a company for retaliatory action against a whistleblower. Rule 240.21F-2(b)(2)  To date, the SEC has not done so.

When preparing an SEC Whistleblower submission, the prevailing wisdom is to keep the focus in the filing on the company's misconduct, but to state that the complainant was retaliated against by the company because he or she made internal complaints and brought the violations to light, and that additional information on this issue is available upon request.

SEC Whistleblower Fraud Lawyers & Attorneys at Law

Do you need a Whistleblower Lawyer or want to know more information about Qui Tam Law and your rights under the False Claims Act?

There are three easy ways to contact our firm:

  1. Use the contact form on this page ("Inquire About Your Potential Case")
  2. Email info@bm.net
  3. Call 888-647-9292

Your information will remain confidential and we will work to protect your rights.

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