The Whistleblower’s Information Must Lead To a Successful Enforcement Action

Under the SEC whistleblower program, information involving conduct that the SEC is not already investigating will be considered to have led to a successful enforcement action if:

• the information is “sufficiently specific, credible, and timely” to commence an examination, open an investigation, reopen an investigation that the SEC had closed, or to inquire about different conduct as part of a current examination or investigation; and
• the SEC successfully brings an action that is based in whole or in part on the conduct identified by the whistleblower.

The SEC will consider original information involving conduct already under investigation or examination to have led to a successful enforcement proceeding if it “significantly contributed” to the success of the action.  The important word is “significantly.”  The SEC will look to whether the information allowed it to bring an action in significantly less time or with significantly fewer resources, bring additional claims, or take action against additional parties.  The burden is high, and for that reason, the SEC has denied a number of claims for a reward on the grounds that the information neither led to nor contributed to a successful enforcement action.

Freiberger Haber LLP is dedicated to providing experienced, dedicated, and aggressive representation for whistleblowers looking to report violations of the federal securities and commodities laws to the SEC or CFTC.  If you have questions about the SEC Whistleblower Program or CFTC Whistleblower Program, contact Freiberger Haber LLP.