Whistleblowing programs, including those offered by the SEC, CFTC, and FinCEN, offer both the potential for reward, and protection from retaliation. While the laws governing the whistleblower programs offer great potential, they can also be complex. Let us help you make the most of your application.
The process for filing a whistleblower complaint and award application is very similar under both the SEC and CFTC Whistleblower programs. The new AML Whistleblowing Program, administered by FinCEN, was modeled off the very-successful SEC program, and, when rules are eventually promulgated to guide the new program, it is likely to follow a similar structure.
How to Submit a Tip
In both the SEC and CFTC programs, the first step to becoming a whistleblower eligible for a reward is the submission of a tip. Both agencies have online processes for submitting a “Form TCR” (Tips, Complaints, and Referrals); it is also possible to submit by mail or fax. It is also possible to upload supporting files alongside the Form TCR, which allows for the submission of a detailed summary of wrongdoing—as space on the Form TCR itself is limited—along with any supporting documentation that may be relevant to the complaint.
The Form TCR can be filed anonymously. In those circumstances, the Form TCR is submitted in the name of the whistleblower’s counsel, with counsel certifying that they have verified the identity of the anonymous whistleblower. Even if a whistleblower does not file anonymously, the agencies treat the information learned in the course of investigation as confidential.
After the Form TCR has been submitted, the agency will provide confirmation of receipt and a submission number. The agency may or may not reach out for further information and, due to the confidential nature of their investigations, will not typically provide updates as to the status of the investigation.
When the agency completes its investigation and a final judgment or order has been reached, it will issue a “Notice of Covered Action.” These notices are not sent directly to the whistleblower, but instead posted on the agency’s website. It is the responsibility of the whistleblower (or their counsel) to monitor for new postings. Relatedly, if more than one agency successfully pursued an investigation based on information provided by the whistleblower, the whistleblower may be entitled to an award based on the recoveries in that “Related Action.” As with the Notices of Covered Action, the agency will not notify the whistleblower of the resolution of a Related Action, and again it falls on the whistleblower (or their counsel) to identify and track such postings.
How to Claim an Award
The second step in the whistleblower award process begins with the posting of the Notice of Covered Action and similar resolutions of Related Actions. The posting of a Notice of Covered Action starts a 90-day clock; within that time period, the whistleblower must submit their application for an award, known as a “Form WB-APP.” Unlike the initial tip submission, Form WB-APPs must be submitted to the SEC by fax or mail; the CFTC does have an online application option.
As with the Form TCR, a Form WB-APP requires a high degree of specificity regarding the whistleblower’s entitlement to an award under the relevant program. Both the SEC and CFTC have published lists of factors which may cause them to increase or decrease the amount of an award, and a successful award application should take these factors into consideration.
Like Form TCR, after submission of an award application the agency will confirm in writing that the Form WB-APP has been received, and will provide a confirmation number. The agency will then assess the application – along with others it may receive – and provide each whistleblower with a “Preliminary Determination” granting or denying an award application, and, if granted, identifying the percentage amount of the award (between 10% and 30%). A whistleblower can request both (1) the opportunity to review the record on which the determination was made, and (2) reconsideration of a Preliminary Determination. The record request must be made within thirty days of the date of the Preliminary Determination, and a request for reconsideration must be made within sixty days of either the date of the Preliminary Determination or the date on which the record was made available.
After the issuance of the Preliminary Determination and any reconsideration process, the agency will provide the whistleblower with a copy of the “Final Order/Award Determination,” which will also be posted online (in redacted form). Final Orders can be appealed to the United States Court of Appeals within thirty days of the issuance of the Final Order.
If no appeals have been filed, the agency can proceed with award payments once thirty days following the posting of the Final Order has passed. If the monetary sanctions have not yet been fully collected from the defendant(s), the agency may delay payment or make incremental payments based on the amount of sanctions collected to date.
For help filing a whistleblower complaint, contact Lundin PLLC Senior Attorney Alexandra Douglas.