How the SEC Uses Whistleblowers in Investigations.

Last Updated on: 4th August 2026, 01:33 am

The SEC uses the whistleblower program to secure insider information that reveals, confirms, or expands on potential evidence of securities-law violations. This process can be summarized as follows:

• Whistleblowers submit tips that are processed by the SEC’s Division of Enforcement, including its Office of Market Intelligence (OMI).
• Tips that are deemed specific, credible, and prompt are the most likely to receive investigative review.
• Whistleblower tips can trigger a whole range of investigative actions: either opening a brand-new investigation, reopening an investigation that the Commission had closed, or pursuing a new line of inquiry in an ongoing investigation.
• While the SEC’s enforcement staff develops evidence, these investigations generally remain confidential; however, whistleblower reports typically include requests for confidentiality, and the SEC will comply unless the information must be disclosed in court.
• While the SEC relies on whistleblowers to provide evidence that can be used to seek civil penalties and disgorgement, whistleblower reporting does not guarantee an award. Several factors play a role here as well, including the whistleblower’s assistance during the investigation, the whistleblower’s compliance with program rules, and the actual amount of the sanctions that the SEC collects.
• But when whistleblower reporting does trigger an award, the amount is based on the monetary sanctions that the Commission and other authorities are able to collect. The SEC has the authority to grant whistleblower awards of 10% to 30% of this total amount.

What You Should Know About the SEC Whistleblower Program

If you are wondering about the SEC whistleblower program, these are a few key takeaways that you should keep in mind:

• Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act created the SEC whistleblower program in 2010.
• The Office of the Whistleblower is a relatively small office operating within the SEC’s Division of Enforcement.
• To qualify as a whistleblower, individuals must submit information to the SEC Office of the Whistleblower. This information must concern a possible federal securities-law violation, and it may address a past, continuing, or anticipated violation.

What Makes the SEC Investigate One Tip Instead of Another?

The Office of Market Intelligence (OMI) is the SEC division that conducts the initial review and triage of all whistleblower tips. In fiscal 2024, the SEC received 24,980 whistleblower tips. Due to resource constraints, there is no possibility that the SEC will investigate every tip received. As a result, only tips that are deemed to be “actionable” (meaning they are credible and the SEC has the ability to pursue them) will be investigated. Tips from the SEC’s Office of the Whistleblower are just one source of information for the SEC’s investigative staff, and whistleblower tips typically gain traction if other information corroborate the whistleblower’s claims.

How to Increase the Likelihood of an Investigation

For individuals and companies whose investigations were triggered by whistleblower tips, there are several key factors that increase the likelihood that the SEC will open an investigation. These factors include:

• Corroborating Documents. This is a key factor because corroborating documents provide evidence that the information disclosed is accurate. The most-effective whistleblower tips include documents (such as corporate records, meeting minutes, and internal emails) that evidence the alleged securities violations, or identify existing documents (such as nonpublic records, confidential spreadsheets, and internal summaries) that can help the SEC build its case.
• Useful Information. To be useful to the SEC, a whistleblower tip must be specific and actionable. Tips that identify key participants, identify specific transactions or other actionable events, or identify the location of nonpublic records are particularly likely to generate an SEC investigation.
• Prompt Reporting. The SEC prioritizes timely enforcement of securities laws. This means that tips concerning past, continuing, or anticipated securities violations that are specific, credible, and timely will be more likely to receive investigative review.

The SEC’s Triage Process

Once the OMI determines that a tip is actionable, it then routes the tip to the appropriate Enforcement Division unit or office based on the tip’s subject matter. While these factors, specificity, credibility, and timeliness, are key triage considerations, they are not Rule 21F award requirements (i.e., not every tip that triggers an investigation will be eligible for an award).

As we discussed, SEC investigations can be extremely time-consuming and expensive. This explains why OMI uses these factors to determine which tips are actionable. Once OMI forwards a tip, it may become part of an SEC matter under inquiry or investigation, or be referred for another type of review or action. OMI and the Enforcement Division’s offices both maintain a high volume of investigations and use OMI’s triage process to separate the actionable cases from those that are not.

Whistleblower Reporting in Fiscal 2024

Based on the SEC’s latest data, allegations of market manipulation constituted 37% of the SEC’s fiscal 2024 whistleblower tips.

What Happens After the SEC Assigns a Tip to Investigators?

If the OMI determines that a whistleblower tip is actionable and assigns it to a group of SEC enforcement staff to investigate, what happens next? In the vast majority of cases, the process is very straightforward (though not entirely predictable) and involves the following steps:

Step 1: Gathering Preliminary Evidence

At this stage, Enforcement staff will examine any evidence provided by the whistleblower; and they will also conduct any other interviews and investigations that are necessary for them to determine the tip’s ability to be corroborated. In addition to interviewing the whistleblower, Enforcement staff may seek interviews from other individuals and request additional evidence. The SEC’s enforcement staff will not accept a whistleblower’s self-certification of truthfulness, and it will not accept the word of any other individual either.

Although most SEC whistleblower investigations proceed smoothly and they do tend to take several years, all of them present unique investigative challenges, and none of them can be fully predicted.

Step 2: Testing the Tip Against Other Sources of Information

The next step in an SEC investigation is to test the whistleblower’s tip against other sources of information. Enforcement staff routinely test tips against data they obtain from:

• SEC filings, news articles, and other public documents
• Trading data from broker-dealers, custodians, and exchanges
• Corporate records obtained through subpoenas
• Witness testimony obtained through interviews and depositions
• Market intelligence from other sources

Step 3: Issuance of a Formal Investigation Order

If a whistleblower tip is supported by other sources of information, the SEC may determine it is appropriate to issue a formal investigation order. This order designates certain Enforcement staff members to lead the investigation and authorizes them to issue subpoenas for documents and testimony. The issuance of a formal investigation order is a key step in SEC investigations, as a formal order empowers designated Enforcement staff to compel witnesses and the production of documents and other materials needed to develop a potential SEC enforcement action.

Step 4: Identifying and Collecting Evidence

After issuing a formal investigation order, Enforcement staff will work to collect all available evidence in the case. As a result, SEC whistleblower investigations often take several years to complete. During this time, whistleblowers can play an important role by continuing to cooperate with Enforcement staff. “Continuing cooperation” includes:

• Timely and complete responses to requests from Enforcement staff
• Witness identifications and referrals
• Guidance regarding Enforcement staff’s efforts to identify and preserve evidence
• Guidance regarding Enforcement staff’s review of subpoenaed documents
• Additional witness identifications and referrals
• Review of Enforcement staff’s findings

Step 5: Determining Whether to Recommend Civil Penalties, Disgorgement, and/or Equitable Relief

Once enforcement staff have completed their review of the available evidence, they will determine whether they believe there are sufficient grounds to recommend that the Commission pursue an enforcement action in federal court or through an administrative proceeding. If a case has been sufficiently documented to warrant enforcement action, they will prepare their recommendation for the Commission’s consideration.

During this process, whistleblowers can provide assistance that is extremely important. SEC whistleblower awards can be substantially increased by whistleblowers’ investigative assistance, and the amount of the whistleblower’s award may be increased based on the whistleblower’s assistance during the investigation and proceeding.

As we have discussed, whistleblowers’ investigative assistance is different from their compliance with their award application process. Once the SEC posts a Notice of Covered Action, whistleblowers must separately file their award claim on Form WB-APP within 90 calendar days of that posting. This claims process is entirely separate from the whistleblower’s investigative assistance, and whistleblowers’ investigative assistance should not be substituted for a timely filing.

If you are facing this situation, Spodek Law Group handles federal criminal defense matters nationwide, from offices in New York and Los Angeles.

Will the SEC Keep My Identity and Investigation Confidential?

Individuals may be reluctant to come forward with whistleblower information due to concerns about the consequences for their employment, the use of their information, and their identity being exposed. The SEC addresses these concerns by allowing anonymous SEC submissions. If an individual meets the requirements to qualify as an SEC whistleblower, and they are represented by counsel, they are then eligible to remain anonymous throughout their interaction with the SEC.

Among other procedural requirements, anonymous SEC whistleblowers must submit their tips through their counsel. However, anonymous SEC whistleblowers may remain anonymous throughout the SEC’s investigations and civil enforcement proceedings. This applies to all forms of civil and administrative proceedings. However, there is a practical limit to the protection of anonymous SEC whistleblowers’ identities, as there are certain circumstances in which the SEC can (and must) disclose a whistleblower’s identity. For example:

• SEC civil investigations can run concurrently with DOJ criminal investigations (and, if a case is referred by the SEC, DOJ investigations can follow SEC investigations). If a criminal investigation is underway, the SEC may disclose a whistleblower’s identity to DOJ prosecutors as required under Exchange Act Section 21F(h)(2).
• Under Exchange Act Section 21F(h)(2), the SEC may disclose an SEC whistleblower’s identity to other federal agencies and states’ regulators who are pursuing the same matter.
• SEC whistleblower tips that are deemed to be actionable may lead to the issuance of SEC subpoenas. Companies that receive SEC subpoenas will not generally know the identity of the whistleblower, but the SEC may disclose information that could reveal the identity in the circumstances permitted by Rule 21F-7.

What Else Should I Know About Confidentiality in SEC Investigations?

When individuals provide whistleblower information to the SEC, they may be left with questions about their involvement in SEC investigations. A few key takeaways are:

• The SEC will generally not notify whistleblowers that an investigation has opened (and, in most cases, the SEC will not notify whistleblowers that an investigation has closed).
• Whistleblowers generally will not receive substantive status updates during the process of a confidential SEC investigation.
• SEC investigations will be based on non-public evidence obtained by the SEC, and whistleblowers will not generally receive information about that evidence unless an SEC enforcement action is filed.
• While an anonymous claimant may maintain their anonymity throughout the process of an SEC investigation, the SEC must verify the identity of an anonymous whistleblower before paying an SEC whistleblower award.

When Does Investigative Help Actually Produce an SEC Award?

For an SEC whistleblower claim to lead to an award, there are several procedural requirements. These include:

• The SEC must have collected monetary sanctions resulting from a covered SEC action.
• The covered SEC action must have resulted in monetary sanctions ordered totaling more than $1 million.

Uncollected monetary sanctions will not generate an amount available for a percentage award, and if the covered action results in monetary sanctions of $1 million or less, the SEC will not issue an award.

The SEC will also issue awards for related-action enforcement, including:

• Enforcement proceedings by the DOJ
• Enforcement proceedings by designated federal agencies (including state or other regulatory authorities)

The SEC will not issue awards for whistleblower-related enforcement proceedings if there is no substantial relationship between the whistleblower’s information and the result of the investigation. If you have information relevant to a securities violation and you are wondering whether it might be the right kind of information for the SEC, one of the first things you should do is consult with an experienced SEC whistleblower lawyer.

How to Apply for an SEC Whistleblower Award

If you are a whistleblower with a pending or completed SEC enforcement proceeding, you will need to follow a specific process to claim an SEC award. The steps involved are:

• Review an SEC Notice of Covered Action. The SEC publishes these notices after a final judgment or order causes the monetary sanctions to exceed $1 million. The notice will give the public notice that an SEC award may be available for the case, and it will state the date on which potential claimants can begin filing their claims with the SEC.
• Review the Notice of Covered Action’s Instructions section. The instructions will explain the types of evidence that are needed for a claimant to successfully claim an SEC award, and they will explain how to properly submit a Notice of Covered Action claim.
• Submit a timely application for a SEC whistleblower award. In most cases, potential claimants have 90 days following the issuance of a Notice of Covered Action to submit their applications.

Reviewing Claims for SEC Whistleblower Awards

After a potential claimant has submitted an application, a group of SEC attorneys and enforcement staff members will review the claim. They will determine whether the whistleblower is eligible for an award, and, if so, they will recommend a percentage amount. In the preliminary recommendation, the SEC staff will address several key factors:

• Investigative Assistance. This is the most important factor in calculating the amount of a whistleblower’s award. As a result, the SEC expressly credits “substantial investigative assistance” in its awards.
• Original Information. To be eligible for an award, a whistleblower must provide “original information.” As noted above, this includes information derived from the whistleblower’s independent analysis or knowledge.
• Original Reporting. Although the SEC has a priority on protecting original reporting, some types of original information may not necessarily lead to an SEC whistleblower award. For example, information provided to the SEC that is not original information may still be entitled to a percentage award if the whistleblower provides “substantial investigative assistance” during the process.

Can Lawyers, Auditors, Compliance Staff, or Participants Qualify?

Can Culpable Whistleblowers Qualify for SEC Awards?

Yes. While it may seem counterintuitive, individuals who participated in securities law violations can qualify for SEC awards. “Culpability” will affect a whistleblower’s award eligibility, but a culpable whistleblower is not automatically ineligible for an award. The only condition that will automatically disqualify a culpable whistleblower from receiving an award is a related criminal conviction.

Can Auditors and Compliance Personnel Qualify for SEC Awards?

Yes. However, compliance and audit personnel are subject to certain additional award-eligibility restrictions. Specifically, individuals working in these positions may not be eligible for awards if the information they intend to share is obtained through their duties as an auditor or compliance officer.

However, these individuals may be entitled to awards in some cases. For example, compliance officers can report directly to the SEC if they are unable to prevent substantial financial injury by following their company’s reporting procedures and they reasonably believe a report is necessary to prevent such injury.

Similarly, compliance officer and auditor information can still qualify as original information if they obtain the information from an independent source or use it to derive independent analysis or conclusions.

Can Company Attorneys Qualify for SEC Awards?

Yes. However, company attorneys must also satisfy additional procedural requirements to qualify as SEC whistleblowers. The first requirement is that company attorneys’ reporting of confidential information must fall within a recognized exception to the attorney-client privilege. If a company attorney’s reporting of confidential information is deemed an appropriate exception, the attorney is not deemed to have participated in the wrongdoing to which the confidential information refers.

The second requirement involves Rule 21F-4. Under Rule 21F-4, the SEC will not credit original information to a claimant if that information is based on:

• Privileged attorney-client communications.
• Information obtained through a violation of criminal law.

But if these limitations are not present, company attorneys can qualify for SEC awards.

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.