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Information a SEC Whistleblower Should Submit

Money Scales

The Dodd Frank Whistleblower Law gives the SEC discretion to award from 10% to 30% of any monies recovered as cash compensation to a SEC whistleblower.    An obvious question then is what types of information may warrant a 30% cash reward and what types of information may only warrant 10%?   Here are a few factors that make a difference:

Set Forth Facts, Not Opinion

Any submission to the SEC by a whistleblower should give a concise statement of the facts upon which the whistleblower believes constitute securities or corporate fraud. The statement should be truthful, obviously. The whistleblower should not embellish the facts and should not offer opinions. The whistleblower should set forth how they came to learn the facts and what their role or relationship is to the company.  A whistleblower should provide a witness list and the location of documents that would tend to support the facts set forth in the SEC submission.  An experienced whistleblower attorney should be willing and able to draft such a statement and at the same time protect the anonymity of the whistleblower.

Submit Documents in Support of the Claim

A SEC whistleblower concise statement of facts should be supported with documentation, when possible.  How the documentation is presented to the SEC at times can be just as important as the facts disclosed in the documents.   For example, assume the whistleblower has in his possession emails that memorialize securities fraud, but the whistleblower is copied on the email.  If the whistleblower wishes to remain anonymous, care should be taken as to when and how his name is redacted, if at all, from the email prior to submission to the SEC. On occasion, a whistleblower should discuss with their attorney prior to submission how they came to be in possession of each document.

Supplement Original Information with Publicly Available Information

A SEC Whistleblower should consider placing their original information of potential corporate or securities fraud in the context of publicly available information.  While the public information alone will not generally allow for cash compensation, placing original information in context may help maximize a cash reward to the whistleblower.

For example, assume a whistleblower has original information that senior executives of a company misrepresented the business outlook of the company to investors.   An experienced whistleblower lawyer can take this information and research its implications using publicly available data.  What exactly did the senior executives state during an investor conference call?  Did the senior executives sell stock immediately after making public statements?   Did the stock price of the company artificially inflate due at least in part to these misleading public statements?   Placing original information in context using publicly available data may paint a more bold and clearer picture, which may lead to a larger cash reward for the whistleblower.