Exposing Fraudulent Companies Through the SEC Whistleblower Program

The United States Securities and Exchange Commission is one of the agencies operating under the United States government. They are responsible for implementing the country’s laws about securities and economic markets, as well as regulating the industry as a whole. For years, the SEC has been dealing with fraudulent transactions from many companies, and the number one reason why they are trying to evade the SEC is to decrease their fees and taxes that should have gone to the government. Many American companies are committing fraud while doing business abroad, and this is what triggered the SEC to create its own Whistleblower Program.

What is the SEC Whistleblower Program?

The SEC Whistleblower Program is an operation promoted by the SEC to encourage the public to report companies that are not paying their dues, especially those which are operating outside the United States. Whistleblowers are those members of the public that ‘blow the whistle’ on a place they can see fraudulent behavior taking place. These people then look to get a whistleblower attorney who will take care of their case and offer them protection and sometimes even a reward. The bounty program began more than two decades ago, and it is successful compared to the predecessor program that it replaced. Those who are working with the agency for the program are also directed to a law firm to help them get a securities lawyer or a whistleblower attorney that they can work with. The lawyer would have to look at all the pieces of evidence presented, and see if the report is authentic.

Companies that owe the United States government monetary sanctions that are up to one million US dollars are the ones who have been targeted by the whistleblowers. Since the program began, the agency has been receiving tips from more than 114 countries. The SEC is happy knowing that the public is cooperating with their goals, and they said that more people are developing an interest to report fraudulent American companies.

Why did the government enact this kind of program?

The SEC spearheaded the program after they found out that the previous whistleblower program enacted by the agency is not receiving a lot of reports. They saw that the rates of fraudulent activities from several companies are not decreasing, and they wanted to act on the problem. In the past, the ones who will be reporting the fraud will be anonymously presented to the investigating team. However, the SEC realized that the tipsters should also be held responsible especially if their allegations are not true. Today, the whistleblowers are signing up a declaration that they can be held liable if they are giving a fake testimony.

How fraudulent tasks can be reported?

There are four major phases within the reporting stage. The first phase, called intake or triage, involves the submission of a complaint to the SEC. The agency will review the complaint, and they will look into all possible angles of how the report came to be. The second phase involves the tracking of the business that has been included in the complaint. This is where the investigation of the SEC will begin, and they will gather all available documents that could help them with the case. The third phase involves the presenting of the reward for the whistleblower. This can only be done once the investigation is complete and the SEC proved that the company involved in an allegation is really involved in fraudulent acts. This is usually when a company may want to start looking into some SEC defense, in case this gets taken to a federal court.

How many people have already used the program to report fraud?

So far, the agency has already given away $300 million to the public. The largest rewards that they have provided to the whistleblower are around $50 million, and it inspires many people to join the hunt for fraudulent companies. With the SEC Whistleblower Program, the agency was able to recover more than $1.4 billion worth of financial penalties. The agency stated that it will continue the hunt for fraudulent companies to increase its collections.

What is the future of the SEC Whistleblower Program?

Because of the success of the SEC Whistleblower Program, the SEC stated that they will keep on providing rewards to the public. They have been collecting billions worth of penalties, and they would never stop from there. They wanted the companies that are registered in the United States to follow the rules and regulations of the government, and they are expecting that the American entrepreneurs would never engage in fraudulent acts that would only lead to their arrest. The SEC stated that they are delighted knowing that the public loves to cooperate, especially when hunting the fraudsters.