[Post updated June 2020] Think you don’t need a lawyer to file an SEC whistleblower case? Think again. The SEC has released new figures from its highly successful whistleblower program and the results are great. Billions of dollars collected from wrongdoers and millions in rewards. Scratch the surface on these statistics and it becomes obvious why you need a lawyer.
We first wrote this post in 2016. At that time the SEC Whistleblower Office was just 5 years old. Since its inception in 2011, the agency has received over 14,000 tips. In that same time period, just 35 awards have been paid out. Based on these numbers, if you do the math, you have just over a .2 chance of receiving an award. You have less than a 1 in 400 chance of receiving a reward.
The total payouts have continued to improve but the odds are still low. According to the SEC’s 2019 annual report to Congress,
“Since the program’s inception, the SEC has ordered wrongdoers in enforcement matters brought with information from meritorious whistleblowers to pay over $2 billion in total monetary sanctions, including more than $1 billion in disgorgement of ill-gotten gains and interest, of which almost $500 million has been, or is scheduled to be, returned to harmed investors. We continue to take pride in the whistleblower program’s contributions to the protection of markets and investors including, importantly, Main Street investors.
In FY 2019, the Commission received its second largest number of whistleblower tips in a fiscal year and made its third largest award to date—a $37 million award to a whistleblower who provided significant evidence and assistance that enabled the agency to bring the matter to an efficient and successful resolution. This award followed a $50 million award to joint claimants in March 2018 and a $39 million award to a whistleblower in September 2018. While all awards are important to the Commission and to whistleblowers, these larger awards reflect the significance of the information that whistleblowers are providing to the Commission and are testaments to the whistleblower program’s success.”
In 2019, the agency received 5,200 tips. The Commission’s hotline fielded 2,600 calls last year. How many rewards? Just eight (8). The odds are around 1 in a 1000.
Why would anyone even bother filing a whistleblower claim with odds this low?
First, when the SEC does make a payout, the awards are huge. we have seen rewards of $37 million, $39 million and 50 million. You would probably have to buy a heck of a lot more than 1000 lottery tickets to achieve those numbers. The average reward to whistleblowers is in the millions of dollars. Not a bad day for doing the right thing.
Another reason to have a lawyer involved in your SEC whistleblower submission is retaliation. Although retaliation is against the law, some companies try to make examples out of employees or former employees who dare to blow the whistle. Just having a lawyer can stem any problems before they even happen.
Probably the biggest reason why there have not been more awards is the nature of the tips and how they are presented. The overwhelming majority of whistleblowers try to file a claim without the help of a lawyer. Unless you have significant investigative and prosecutorial experience, it is hard to properly present a claim.
Let’s dive a bit deeper into that process.
SEC staff tells us that the big ticket rewards are going to whistleblowers with counsel. That doesn’t mean the information held by unrepresented whistleblowers is less accurate.
Overworked SEC staff don’t have time to investigate every claim. If you want your claim to be understood and useable by government lawyers, you need to think and write like one. Busy prosecutors are always going to pick a well organized and investigated complaint over an unorganized mass of documents.
If you are an overworked agent in the SEC, are you going to pick the case that comes in with thousands of others through an online portal or are you going to select the report that is hand filed, fully investigated and contains all the information the agent needs to build her case?
Earlier we said that there were 5,200 tips submitted in 2019 and 2,600 by phone. Like all of the other government tip lines, there are no rewards for phone tips. It might be the easiest way to report but you won’t get a check from Uncle Sam no matter how great your information.
If you are worried about paying an attorney, don’t be. The better SEC whistleblower lawyers mostly charge on a contingent fee basis. That means they don’t get paid unless you get paid. By having skin in the game we have the motivation to insure that your tip goes to the top of the pile.
Choosing the Right SEC Whistleblower Lawyer
Hopefully we convinced you of the need for a lawyer. Equally important is finding an experienced SEC whistleblower lawyer.
Many lawyers – even experienced whistleblower lawyers – are put off by the long odds. Earlier in this post we talked about lottery tickets. Some lawyers look at these case like the Powerball Lottery. Long odds but worth buying a ticket because of the huge payouts. What that means is that they will spend a few hours drafting a tip, file it and cross their fingers.
You are probably better of than filing it without a lawyer but the odds are still low. We have a great reputation with the SEC. There are just a handful of other law firms that can make a similar claim.
Despite the long odds, we continue to monitor our cases after filing. We continue to investigate and push our cases. We try to find the best agents in the SEC and generate interest in our cases. And that is often the winning difference.
In 2018 we brought onboard the former chief of investigations from the SEC. We are continuing to cultivate relationships within the Commission to find the people and offices most interested in specific cases.
Whether you choose us or another SEC whistleblower lawyer, make sure they have experience working with the Commission. It could make the difference between no reward and a million dollar check.
MahanyLaw and the SEC Whistleblower Program
The whistleblower lawyers at MahanyLaw prosecute all types of whistleblower cases. It isn’t an afterthought or side practice. Rather, it is what we do. Our clients have already received over $100 million in awards.
Not only have we been successful, we have a great team to help insure the success of your case. We have former prosecutors and agents on our team. We take your information and build it into a case that the SEC can simply take over.
Having the right lawyers is also critical should you find yourself the victim of whistleblower retaliation.
Obviously getting paid a reward is important to many people. Reporting wrongdoing is also the right thing to do. As noted above, whistleblowers have helped the SEC level the playing field for honest businesses, collect billions of dollars from wrongdoers and collect over $500 million for victims of securities fraud.
For more information, visit our SEC whistleblower information page. Ready to see if you have a case? Contact attorney Brian Mahany online, by email or by telephone at (202) 800-9791. All inquiries are protected by the attorney – client privilege and kept strictly confidential.
MahanyLaw – SEC Whistleblower Lawyers