Over the past few decades, government regulators have begun to keep a much closer eye on the conduct of those in charge at large corporations. However, regulators may not be privy to all the inner-workings of a corporation, and given the number of corporations and lack of available resources to ferret out the wrongdoers, corporate misconduct flew under the radar for years. More recently, however, the Securities and Exchange Commission (SEC) started the SEC whistleblower program, which relies on employee whistleblowers to report violations of U.S. securities laws.
Under the SEC whistleblower program, an employee who voluntarily reports information that assists the SEC in recovering amounts of more than $1 million is eligible for a financial award. The amount of the award ranges between 10% to 30% of the monetary sanctions collected by the government. These funds are paid out of a separate fund called the Investor Protection Fund, rather than with company proceeds.
To be eligible for a reward through the SEC Whistleblower program, a reporting employee must be able to show the following:
- The information provided relates to a violation of U.S. securities law or relates to the bribery of a foreign official;
- The information was provided voluntarily, and not in response to questioning or an investigation;
- The information was based on personal knowledge, and not publicly available records; and
- The information must result in a new investigation or significantly contribute to an existing investigation.