Introduction to SEC Covered Actions
The Securities and Exchange Commission (SEC) has established a whistleblower program to encourage individuals to report potential securities law violations. The program provides monetary awards to eligible whistleblowers who provide original information that leads to a successful enforcement action.
To be eligible for a whistleblower award, an individual must provide information about a covered action, which includes any judicial or administrative action brought by the SEC. The action must result in a monetary sanction exceeding $1 million.
Eligibility Criteria for Whistleblower Awards
To be eligible for a whistleblower award, an individual must meet certain criteria. The individual must provide original information that is not already known to the SEC, and the information must be provided voluntarily. The individual must also provide the information in the form and manner required by the SEC.
Additionally, the individual must not be a member of a firm or organization that is subject to SEC regulation, such as a registered investment adviser or broker-dealer. The individual must also not have been convicted of a crime related to the covered action.
Types of Covered Actions
Covered actions include any judicial or administrative action brought by the SEC, such as a civil lawsuit or an administrative proceeding. The action must result in a monetary sanction exceeding $1 million, and the sanction must be paid to the SEC or the Treasury.
Examples of covered actions include enforcement actions against companies for securities fraud, insider trading, or other violations of the securities laws. Covered actions may also include actions against individuals, such as CEOs or CFOs, who have engaged in wrongdoing.
Whistleblower Award Process
The whistleblower award process typically begins with the submission of a tip or complaint to the SEC. The SEC will then review the information and determine whether it is eligible for an award. If the information is eligible, the SEC will issue a notice of covered action, which will provide details about the action and the potential award.
The whistleblower will then have the opportunity to claim the award, which will be determined by the SEC based on the significance of the information provided and the extent to which it contributed to the success of the covered action.
Protection for Whistleblowers
The SEC provides protection for whistleblowers who report potential securities law violations. The SEC will keep the whistleblower's identity confidential, and will not disclose the whistleblower's name or any other identifying information.
Additionally, the SEC has rules in place to prevent retaliation against whistleblowers. Employers are prohibited from taking any action against an employee who reports potential securities law violations, and whistleblowers who experience retaliation may be entitled to relief.
Frequently Asked Questions
What is a covered action under the SEC whistleblower program?
A covered action is any judicial or administrative action brought by the SEC that results in a monetary sanction exceeding $1 million.
How do I report potential securities law violations to the SEC?
You can report potential securities law violations to the SEC by submitting a tip or complaint through the SEC's website or by contacting the SEC's Office of the Whistleblower.
What are the eligibility criteria for a whistleblower award?
To be eligible for a whistleblower award, you must provide original information that is not already known to the SEC, and the information must be provided voluntarily.
How is the amount of a whistleblower award determined?
The amount of a whistleblower award is determined by the SEC based on the significance of the information provided and the extent to which it contributed to the success of the covered action.
Are whistleblowers protected from retaliation?
Yes, the SEC has rules in place to prevent retaliation against whistleblowers, and employers are prohibited from taking any action against an employee who reports potential securities law violations.
Can I remain anonymous when reporting potential securities law violations to the SEC?
Yes, the SEC will keep your identity confidential, and will not disclose your name or any other identifying information.