Key Takeaways

• The SEC and CFTC programs pay 10% to 30% of the money collected when a whistleblower’s original information leads to sanctions of more than $1 million.
• The False Claims Act lets a private person sue on the government’s behalf over fraud against a federal program and receive a share of the recovery.
• The law prohibits retaliation, but the protection depends on how and to whom you report. Get advice before you report, not after.
• Being first matters. A later whistleblower with the same information may receive nothing.

SEC Whistleblower Program

The Securities and Exchange Commission pays awards to people who voluntarily give it original information about a violation of the federal securities laws. If the information leads to an enforcement action with more than $1 million in sanctions, the whistleblower is eligible for 10% to 30% of what is collected. Conduct commonly reported includes:

• Accounting fraud and false financial statements.
• Misleading statements to investors in an offering.
• Insider trading and market manipulation.
• Ponzi schemes and other investment frauds.
• Misconduct by brokers, investment advisers and funds.
• Bribery of foreign officials.

You do not have to be an employee of the company. You can report anonymously if you are represented by an attorney, who submits the information for you.

CFTC Whistleblower Program

The Commodity Futures Trading Commission runs a parallel program for violations in the futures, swaps, commodities and derivatives markets, including manipulation, spoofing and fraud in digital asset trading. The award range is the same: 10% to 30% of sanctions collected in actions exceeding $1 million.

IRS Whistleblower Program

The Internal Revenue Service pays awards for information about tax underpayments. Where the amount in dispute exceeds $2 million, the award is generally 15% to 30% of what the IRS collects. If the taxpayer is an individual, that person’s gross income must also exceed $200,000 in at least one of the tax years at issue. Attorney Michael A. Siddons holds an LL.M. in Taxation, which matters in presenting a tax claim the IRS will act on.

False Claims Act (Qui Tam) Cases

The False Claims Act targets fraud against the government: billing Medicare or Medicaid for services not provided, overcharging on government contracts, lying to obtain federal loans or grants, and avoiding money owed to the government. A private person, called a relator, files the case in the government’s name. The complaint is filed under seal, which means it is kept confidential while the government investigates and decides whether to take over the case.

If the case succeeds, the relator generally receives 15% to 25% of the recovery when the government joins the case and 25% to 30% when it does not. New York, New Jersey and Maryland also have their own false claims laws covering state funds.

Protection From Retaliation

Federal law bars an employer from firing, demoting, harassing or otherwise punishing an employee for lawful whistleblowing. Remedies can include reinstatement, double back pay and attorney fees. The protections are not all the same. Under one of the main federal laws, an employee is protected only if the report was made to the SEC, so reporting internally and stopping there can leave you exposed. We plan the order of your reports with that in mind.

Before You Report

• Do not confront the people involved or announce what you intend to do.
• Do not use a work computer, work phone or work email to contact a lawyer.
• Do not take documents you do not already have a right to see. Ask us first what you may keep.
• Write down what you know: who, what, when and how you know it.
• Do not wait. Awards go to original information, and the first to report is in the strongest position.

What Our Firm Does

• Evaluate what you know and which program fits it.
• Prepare a detailed submission that gives the agency a reason to open an investigation.
• Submit it for you, anonymously where the program allows.
• Deal with the agency’s investigators on your behalf.
• Apply for your award when sanctions are collected.
• Protect you if your employer retaliates.

Who We Help

• Accountants, finance staff, compliance officers and executives.
• Employees of brokerage firms, funds and investment advisers.
• Billing, coding and clinical staff at healthcare providers.
• Employees of government contractors and grant recipients.
• Outside consultants, vendors and investors with first-hand knowledge.

Frequently Asked Questions

Can I stay anonymous?

Under the SEC and CFTC programs you can submit anonymously through an attorney, and the agencies are required to protect your identity. A False Claims Act case is filed under seal, but your identity generally becomes known to the defendant if the case goes forward. We explain what to expect before you decide.

Do I have to report to my company first?

Not to qualify for an SEC or CFTC award. Internal reporting can affect the size of an award and your protection from retaliation, in both directions. The right order depends on your position and your employer, and it should be decided before you report anywhere.

What if I was involved in the conduct?

Involvement does not automatically disqualify you. It can reduce an award, and a person convicted of a crime related to the conduct cannot collect. Tell us the truth at the start so we can advise you properly.

How long does it take?

Years, in most cases. The agency must investigate, bring an enforcement action, collect the money and then decide the award. A False Claims Act case can stay under seal for a long time while the government investigates.

What does it cost?

The first conversation is free and confidential. If we take your matter, the fee terms are put in writing before any work begins.

Talk to Us Before You Report

Email msiddons@siddonslaw.com from a personal account with a general description of what you know. Do not send documents. We will reply and tell you what to do next.