What is the relationship between the SEC and whistleblower law?

The relationship between the Securities and Exchange Commission (SEC) and whistleblower law concerns the protection of those who report violations of securities legislation. Under whistleblower law, the SEC may reward individuals who provide original information to the SEC that leads to the successful enforcement of a securities law violation. This reward can take the form of financial compensation, ranging from 10% to 30% of the total monetary sanctions recovered by the SEC in that enforcement action. The SEC considers many factors when deciding whether to award a reward. These include the specificity of the information provided, the level of assistance during the investigation, and the amount of money at stake in the enforcement action. To initiate the whistleblower process, individuals must first submit a tip to the SEC through the SEC’s website, by email, or by mail. The tip should include as much detail as possible related to the violation of securities law. The SEC reviews the tip and determines whether or not it is suitable for enforcement action. If the SEC determines that the tip is worth investigating, it will investigate the allegation and may take legal action against the wrongdoer. If the SEC is successful in its investigation, the whistleblower could be eligible to receive a reward from the total monetary sanctions, which could be in the millions of dollars. By providing protection and incentivizing individuals to report securities law violations, whistleblowers enable the SEC to investigate possible violations and protect the integrity of the securities markets.

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