Anonymous Whistleblower Tips to the SEC.

According to Rule 21F-9 of the SEC Rules and Regulations, a person may file a whistleblower tip “anonymously, provided that the person is represented by counsel.” However, even with counsel, SEC whistleblowers must disclose their identities to the Commission before the Commission can issue an award.

Along with disclosing its identity, a person who files an anonymous whistleblower tip must (i) provide “information that qualifies as “original information,” and (ii) comply with the SEC’s requirements for obtaining whistleblower award eligibility.

If a whistleblower does not meet all of these requirements, their anonymous tip to the SEC will not be eligible for a whistleblower award.

With that said, a person may submit an anonymous tip to the SEC without concerns about award eligibility. In that case, the SEC whistleblower submission process is relatively straightforward:

• To submit an anonymous whistleblower tip, a person may complete and send Form TCR to the SEC without necessarily retaining counsel for the purposes of filing.
• While a whistleblower may send an anonymous tip to the SEC without filing a paper Form TCR, if they wish to preserve their award eligibility, they must be represented by counsel, and their counsel must submit the information through the SEC’s online TCR portal or by submitting a Form TCR.

Does Filing Anonymously Guarantee That I Can Keep My Identity Secret?

No, filing anonymously with the SEC does not guarantee that a whistleblower can keep their identity secret. In fact, even if a whistleblower qualifies for an SEC whistleblower award, that person may still need to disclose their identity to the SEC in order to receive the award.

When Do I Need to Hire an SEC Whistleblower Lawyer?

Anonymity is an important consideration when deciding whether to hire an SEC whistleblower lawyer. For example, while named whistleblowers may submit Form TCR without hiring counsel, anonymous whistleblowers must hire counsel to preserve their award eligibility.

Named SEC whistleblowers should, however, also hire an SEC whistleblower lawyer, as they must carefully meet various requirements to seek whistleblower award eligibility, and, as we explain below, they need to be careful not to inadvertently disclose their identities to the SEC.

What Must My Lawyer Do If I Want to File an Anonymous SEC Whistleblower Tip?

If you want to file an anonymous SEC whistleblower tip, your lawyer must take all necessary steps to make sure that you comply with all of the SEC’s whistleblower rules and regulations. This includes (i) making sure that you provide your lawyer with a signed Form TCR, (ii) making sure that your lawyer verifies your identity (at least to your lawyer’s reasonable satisfaction) before filing Form TCR on your behalf, and (iii) making sure that your lawyer serves as the point of contact with the SEC for all matters related to your whistleblower tip.

When you sign Form TCR, you will be certifying “under penalty of perjury” that the information you are providing to the SEC is true and correct to the best of your knowledge. Similarly, when your SEC whistleblower attorney files Form TCR with the SEC, your attorney must (i) review your Form TCR to make sure that you provided all of the information required by the SEC whistleblower rules and regulations, (ii) make sure that all of the information you provided is complete and accurate, and, (iii) certify to the SEC that your attorney has reviewed your Form TCR to make sure that you provided all the information required by the SEC whistleblower rules and regulations.

If your attorney makes any representations to the SEC on your behalf, your attorney must do so truthfully and accurately. Finally, if you wish to seek whistleblower award eligibility, your attorney must be prepared to disclose your identity to the SEC before the SEC can award you.

What Does Rule 21F-9 Require When I File an Anonymous SEC Whistleblower Tip?

Along with the other requirements discussed above, Rule 21F-9 of the SEC Rules and Regulations requires whistleblowers who wish to file anonymously and preserve their award eligibility to do the following as well:

• The whistleblower’s counsel must certify that it has reviewed the Form TCR “for completeness and accuracy to the best of its counsel’s ability.”
• The whistleblower’s counsel must retain the original, signed copy of the whistleblower’s Form TCR and “furnish such original signed copy to the Commission upon the Commission’s request.”
• The whistleblower’s counsel must make all representations made to the Commission regarding the whistleblower’s identity, such and for the purposes of a “whistleblower award,” be “the point of contact with the Commission on behalf of the whistleblower.”
• The whistleblower’s counsel must make all representations and disclosures as otherwise required by the Commission’s whistleblower rules and regulations.

What if I Want to File a Whistleblower Complaint With the SEC?

If you are planning on filing an SEC whistleblower complaint, one important thing to keep in mind is that SEC whistleblower submissions are administrative submissions rather than civil complaints. This means that whistleblowers must file “an application, statement, or other form” in order to disclose potential whistleblower information to the SEC, and they must not file a civil complaint.

So, regardless of whether you are filing an anonymous or named SEC whistleblower complaint (or seeking SEC whistleblower award eligibility), you need to make sure that you are not filing a civil complaint. Instead, you should make sure that you are filing a Form TCR with the SEC.

When Can the SEC Reveal the Identity of an Anonymous Whistleblower?

While the SEC does not publicly disclose the identities of anonymous whistleblowers, it is possible for the details of a whistleblower’s submission to reveal that person’s identity (and that possibility exists regardless of whether the whistleblower’s name appears in their submission).

The SEC may also need to call on an anonymous whistleblower for testimony during the enforcement proceedings related to the whistleblower’s submission. Finally, although the SEC’s whistleblower rules and regulations include detailed provisions regarding whistleblower confidentiality, the SEC’s ability to maintain whistleblower confidentiality is still subject to certain statutory exceptions.

For example, even if a whistleblower submits information to the SEC under the SEC’s whistleblower rules and regulations, a person or company may be able to learn that whistleblower’s identity through a request under the Freedom of Information Act (FOIA). While a request under the Freedom of Information Act cannot generally be used to obtain a whistleblower’s identity directly from the SEC, there are exceptions in certain circumstances, as well as other ways that a whistleblower’s identity could be disclosed.

What Other Disclosure Exceptions Exist Regarding SEC Whistleblower Identity?

Exchange Act Section 21F(h)(2)(A) includes two other disclosure exceptions regarding the disclosure of a whistleblower’s identity:

• Information Disclosures in Public Proceedings, Section 21F(h)(2)(A) allows the SEC to disclose a whistleblower’s identity (and any other information the SEC possesses related to the whistleblower) as a result of “any public proceeding” or if it is “required in a public proceeding,” provided that “this shall not be construed as permitting the Securities and Exchange Commission to disclose the identity of any whistleblower to the public.”
• Necessary Information Sharing, Section 21F(h)(2)(D) also allows the SEC to provide information that could reasonably be expected to reveal a whistleblower’s identity to specified government and regulatory authorities when the Commission determines that doing so is necessary to accomplish the purposes of the Exchange Act and to protect investors, including:
• “the Department of Justice (DOJ) for use in, and in connection with, any relevant investigation or enforcement action,” and
• “any of the SEC’s self-regulatory organizations or, as the Commission determines, any other federal agency, in order to obtain or to seek protection of a whistleblower’s identity.”

If the SEC discloses a whistleblower’s identity to one of the entities listed above, that entity is obligated under Section 21F(h)(2)(D)(ii) to “maintain confidentiality on a basis at least equal to the level of confidentiality that the Commission is required to provide to whistleblowers under the SEC’s whistleblower rules.”

What Evidence Can I Safely Provide to the SEC Without Exposing Myself?

As a general rule, whistleblowers should only preserve the materials (and any additional information) to which they are lawfully entitled to have access. This is true in all cases, and it is especially important for anonymous whistleblowers to adhere to this rule. If a whistleblower provides the SEC with evidence that he or she collected unauthorizedly, then he or she could inadvertently (and needlessly) face employment, civil, or criminal exposure.

What Are the Risks of Providing Digital Evidence in an SEC Whistleblower Submission?

Digital evidence in SEC whistleblower submissions carries two main risks.

• Metadata, Digital evidence carries metadata that, even if not explicitly visible, contains information such as the document author’s name, the author’s employer, the date and time the author created the document, the author’s device information, the author’s editing history, and other information. If a whistleblower is worried about their identity remaining confidential, they need to be very careful when they provide digital evidence.
• Privileged Information, Under Rule 21F-4, information “protected under 18 U.S.C. § 19 or exempt from disclosure under another applicable federal statute or rule” is not considered “original information” and “cannot be used to determine a whistleblower’s eligibility for an award.” Rule 21F-4 explicitly identifies “attorney client privilege” as one of those examples.

Is My Evidence Subject to the Attorney Client Privilege?

The attorney client privilege is a key rule in the federal court system that requires an attorney to keep communications that he or she received from a client confidential. For example, if a whistleblower (or potential whistleblower) provides evidence to the SEC regarding a matter he or she previously received from his or her attorney, then it is possible that that information is protected under the attorney client privilege. However, the attorney client privilege typically applies only to communications, not to the underlying facts that an attorney and client discuss or the pre-existing documents that they review together.

Are SEC Whistleblower Attorneys Subject to Special Restrictions?

Yes, SEC whistleblower attorneys are subject to special restrictions under Rule 21F-4 when they rely on information related to their attorneys’ clients. If an attorney, in his or her own professional capacity, relays information he or she obtained from her own client to the SEC in an effort to establish whistleblower award eligibility, then he or she must first be able to establish that Rule 21F-4 does not apply to the information at hand (or that the attorney or SEC is otherwise entitled to use the information).

Do SEC Auditors or SEC Compliance Professionals Have Special Restrictions?

Yes, SEC auditors and SEC compliance professionals (as well as internal auditors and internal compliance professionals) also face special restrictions when it comes to establishing their original-information status under Rule 21F-4.

If any of this describes your situation, it is worth talking it through with counsel. Spodek Law Group can be reached at 212-300-5196.

What Makes an Anonymous SEC Whistleblower Tip Eligible for an Award?

To seek whistleblower award eligibility, the SEC whistleblower claimant must (i) provide voluntary information to the SEC, (ii) provide original information to the SEC, (iii) file a qualifying submission, and, (iv) contribute to the SEC’s successful enforcement action.

With regard to providing voluntary information, in general, the information provided must be voluntary in that it is provided before a request for the information is made by the SEC (or any other entity) to the whistleblower.

With regard to providing original information, information qualifies as original information only if it meets every requirement of Rule 21F-4(b)(1): it must be derived from the whistleblower’s independent knowledge or independent analysis, it must not already be known to the Commission from any other source, it must not be exclusively derived from an allegation made in a judicial or administrative hearing, a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of that information, and it must have been provided to the Commission for the first time after July 21, 2010.

With regard to filing a qualifying submission, a whistleblower’s submission must be made in accordance with the SEC’s rules and regulations and must contribute to the SEC’s successful enforcement action.

With regard to contributing to the SEC’s successful enforcement action, it must be true that, the whistleblower’s information was sufficiently specific, credible, and timely to cause the SEC to open an investigation, reopen a closed investigation, or inquire into new conduct, or that it significantly contributed to the success of the SEC’s enforcement action.

Do I Need to Report Internally to the SEC or my Employer in Order to Qualify for an SEC Award?

No, reporting internally to the SEC or to your employer is not a requirement for SEC award eligibility. That said, if you file an anonymous SEC whistleblower submission that includes a report to the SEC (or to your employer), this will preserve your internal-report date for calculating any applicable award.

If you do not file a report to the SEC (or to your employer) when you file your anonymous SEC whistleblower submission, you may still be able to preserve your internal-report date by filing a report to the SEC (or to your employer) that includes the same information within 120 days after filing your anonymous SEC whistleblower submission.

Can a Delayed SEC Whistleblower Submission Impact the Amount of my Award?

Yes, although whistleblowers are not required to report immediately, an unreasonable delay in reporting may reduce the amount of the whistleblower’s award.

What is the SEC Whistleblower Program?

The SEC Whistleblower Program was created in 2010 as a result of Congress passing the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under this program, individuals who file whistleblower tips can become SEC whistleblowers and, in some cases, qualify for SEC whistleblower award eligibility. Note that companies cannot be SEC whistleblowers.

How Do I Claim and Receive an SEC Whistleblower Award?

What Must Happen in Order for a Whistleblower to Seek Monetary Award Eligibility from the SEC?

If you have filed an anonymous SEC whistleblower tip and if your tip has led to an SEC enforcement action that is subject to monetary sanctions, you may be eligible for an SEC whistleblower award. However, in order to qualify for monetary award eligibility, the SEC’s enforcement action must be subject to monetary sanctions of more than $1 million. If it is subject to monetary sanctions of more than $1 million, the SEC will then assess your award eligibility on a case-by-case basis, and may, if appropriate, grant you an SEC whistleblower award in the amount of 10 percent to 30 percent of the monetary sanctions collected by the SEC as a result of your tip.

It is important to note that your award eligibility depends on the amount of money collected by the SEC, not on the amount of sanctions ordered against the SEC’s defendant(s) in the related SEC enforcement action.

What is a Notice of Covered Action?

Generally, after filing a qualifying final order (or settlement agreement) in a whistleblower enforcement action, the SEC will post a Notice of Covered Action on the SEC website. This Notice of Covered Action (or Notice of Covered Action) will notify potential award recipients that a final order (or settlement agreement) was filed in the relevant SEC enforcement action and that an SEC award application can be submitted.

What Must a Whistleblower Do to Preserve Their Rights to an SEC Award?

As a result of the SEC’s issuance of a Notice of Covered Action, if you are interested in pursuing an SEC whistleblower award, you need to make sure that you monitor the SEC website for any Notices of Covered Action. If you file a timely SEC whistleblower award application (Form WB-APP) with the SEC, then the SEC Office of the Whistleblower will review your application (and your whistleblower submission) in order to determine whether you are entitled to a whistleblower award.

In order to file an SEC whistleblower award application, you need to complete and submit Form WB-APP to the SEC. If you do not file an SEC whistleblower award application within 90 days of a Notice of Covered Action, then you can lose your SEC award eligibility.

Are SEC Whistleblower Awards Taxable?

Keep in mind that, even if you qualify for an SEC whistleblower award, your award may be subject to taxation. Generally, SEC whistleblower awards are taxable as gross income under Section 61 of the Internal Revenue Code (IRC), which provides that:

“ Except as otherwise provided, gross income means all income from whatever source derived...”

What is the SEC Office of the Whistleblower?

The SEC Office of the Whistleblower is the office within the SEC responsible for administering the SEC’s whistleblower award program. If you have any questions about the SEC’s whistleblower program or if you are interested in filing an anonymous (or named) SEC whistleblower submission, we invite you to get in touch with a member of Spodek Law Group’s federal whistleblower defense team.

What Protections Do I Have Against Retaliation When Reporting Securities Violations to the SEC?

If you are considering coming forward as an anonymous SEC whistleblower, there are two main types of retaliation protections available: Dodd-Frank whistleblower protections and Sarbanes-Oxley whistleblower protections.

With regard to Dodd-Frank whistleblower protections, for SEC retaliation claims filed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a whistleblower’s retaliation claim must generally involve disclosing, or attempting to disclose, information to the SEC which the whistleblower reasonably believes indicates that “a violation of any provision of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or of any rule or regulation promulgated thereunder” may be occurring, may have occurred, or may be occurring in the future.

With regard to Sarbanes-Oxley whistleblower protections, for SEC retaliation claims filed under the Sarbanes-Oxley Act, whistleblowers do not necessarily need to report to the SEC in order to protect against retaliation. However, as a general rule, while SEC retaliation claims filed under the Sarbanes-Oxley Act may protect internal workplace reports involving securities law violations, an SEC retaliation complaint must also be filed with the Occupational Safety and Health Administration (OSHA) within 180 days of the date of the retaliatory action, unless this filing deadline is tolled in certain circumstances.

What is Rule 21F-17(a)?

Rule 21F-17(a) of the SEC Rules and Regulations is a rule that prohibits employers from taking steps that “obstruct, impede, or prevent” communications with the SEC’s whistleblower staff. It is important to note, however, that Rule 21F-17(a) is not the only rule that protects anonymous SEC whistleblowers (and it is not the source of the retaliation prohibition under the Dodd-Frank Wall Street Reform and Consumer Protection Act).

Regardless of whether a company has a confidentiality agreement or a nondisclosure agreement in place with its employees, it is unlawful for the company to attempt to use the agreement to unlawfully prohibit those employees from reporting to the SEC.

With that said, as a general rule, even if a company attempts to use a nondisclosure agreement or confidentiality agreement in order to lawfully prohibit its employees from reporting to the SEC, the SEC still prohibits that company from attempting to unlawfully prohibit it employees from directly communicating with the SEC.

How Long do I Have to File a Retaliation Claim After an SEC Whistleblower Submission?

With regard to filing a retaliation claim following an SEC whistleblower submission, you must take care to strictly adhere to the deadline requirements under Exchange Act Section 21F(h)(1)(B)(iii), as established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, providing that:

• Six-Year Occurrence Deadline, The adverse action must have occurred no more than six years prior to the date of the retaliation claim filing;
• Three-Year Discovery Deadline, The adverse action must have been discovered, or could have been discovered by reasonable diligence, no more than three years prior to the date of the retaliation claim filing, and
• Ten-Year Repose Deadline, The adverse action must have occurred no more than ten years prior to the date of the retaliation claim filing.

Section 21F(h)(1) of the Exchange Act contains the Dodd-Frank whistleblower retaliation prohibition and includes the protections discussed above.

Speak With a Federal Defense Lawyer

If you are dealing with any part of what this article describes, the next step is a conversation with a lawyer who handles these cases. Spodek Law Group is a second generation criminal defense firm practicing since 1976, representing clients nationwide from offices in New York, Brooklyn, Queens and Los Angeles. Call 212-300-5196 to speak with our team.