It can be terrifying to become aware of fraud within the corporation that employs you. Choosing to expose that fraud and become a whistleblower means risking your livelihood, friendship with colleagues, and financial security. Once you become a whistleblower and an investigation into the fraud commences, there is a serious chance that you will feel the wrath of those you have exposed. Loss of employment, punitive or disciplinary action, and defamation are just some of the forms of retaliation that whistleblowers sometimes experience. Luckily, the Securities and Exchange Commission’s (SEC) Whistleblower Program has anti-retaliation protections in place.
Clients who are thinking of becoming whistleblowers often ask about the anti-retaliation provisions of the SEC’s program, so I have described them fully below:
Potential vs. Proven Securities Fraud
The SEC receives many, many whistleblower claims for every one that ends up being investigated and prosecuted. In the end, a small fraction of whistleblowers’ reports of securities fraud actually result in a rewards. Thus, if only those whistleblower’s whose cases that resulted in a successful prosecution received anti-retaliation protection, then there could be a significant chilling effect on reporting in general. Luckily, that is not the way it works, and as long as you are making a good faith report of “potential” securities fraud on the appropriate forms to the SEC, you receive anti-retaliation protection.
An Example of Retaliation and Its Consequences
In the Matter of Paradigm Capital Management, Inc. and Candace King Weir, File No. 3-15930 (June 16, 2014), provides an excellent example of what can happen in an SEC whistleblower case as described in the SEC’s press release:
The whistleblower in this matter suffered unique hardships, including retaliation, as a result of reporting to the Commission.
The SEC charged Paradigm with retaliating against the whistleblower after the firm learned that the whistleblower reported potential misconduct to the Commission. Paradigm immediately engaged in a series of retaliatory actions against the whistleblower including removing the whistleblower from the whistleblower’s then-current position, tasking the whistleblower with investigating the very conduct the whistleblower reported to the SEC, changing the whistleblower’s job function, stripping the whistleblower of supervisory responsibilities, and otherwise marginalizing the whistleblower.
The whistleblower will receive over $600,000 for providing key original information that led to the successful SEC enforcement action.
Ant-Retaliation Protection Takes Effect Upon Submission of a Claim to the SEC
The anti-retaliatory protections of the SEC Whistleblower Program take effect as soon as the whistleblower claim is filed. It does not matter whether the SEC ever investigates or acts on the complaint whatsoever. However, once again, it is crucial that you submit your claim to the SEC properly and on the correct forms. Having experienced whistleblower counsel by your side to make that filing and ensure that the anti-retaliation protection kicks in is vital to protecting your livelihood.
What If I Don’t Qualify for an Award, But Want Retaliation Protection?
It is not settled where the line is between who can be a whistleblower to the SEC—not everyone can be—and who can receive whistleblower protection. As you can imagine, there is a large group of people who are not eligible for whistleblower protections, including some auditors, attorneys, and senior leadership. But while this group may not qualify for an award, they may still be eligible for anti-retaliation protection if they bring securities fraud within their corporation to the SEC’s attention.
What Should You Do if You are Considering a Whistleblower Claim?
Are you considering filing an SEC whistleblower case? To attain your compensation, you will require the help of an experienced whistleblower attorney to decide whether the conduct you have observed constitutes fraud. Evidence gathering, dealing with the federal government’s attorneys, important deadlines, and filing requirements make your representation both complex and time-sensitive.
Call Barrett Law now at (800) 707-9577 if you think you may be an SEC whistleblower.
Having expert legal advice by your side can mean the difference between receiving your share of a whistleblower judgment and losing your career and livelihood. Call us today.
