What to Expect When Filing a SEC or FCA Whistleblower Claim
iWhen we think of whistleblowers, we tend to think of people like Edward Snowden, the NSA contractor who exposed far-reaching surveillance programs in US intelligence agencies. According to The New Yorker, his whistleblowing led to him being charged under the Espionage Act, and to this day, he lives in Russia after claiming political asylum.
Despite what Snowden’s fate suggests, there are many legal rights for whistleblowers. While the US government discourages whistleblowing that affects national security, it takes a different approach to financial crime reported via the SEC or FCA.
Want to learn more about what to expect when filing a SEC or FCA whistleblower claim? Read on for more information about reporting fraud and whistleblower protection laws.
The Whistleblowing Process in Four Steps
When reporting something like financial fraud, there are four main steps to the process. Here’s how they work.
1: Triage and Lawful Evidence Gathering
At this stage, the whistleblower needs to record what happened. Take a journalistic approach by recording what happened, who did it, how it violated the law, and how much money was involved. Keep the original filenames and timestamps on any evidence you have, where possible.
The following are good potential sources of evidence:
- Another witness
- Details about patterns over time
- Internal emails
- Trading logs
- Meeting notes
- Code commits
By gathering high-quality, usable evidence, you’re more likely to get a higher percentage of the settlement.
2: Choose the Right Venue
It’s crucial that you pick the appropriate agency to file your claim with. Here are a few of the government agencies you could bring your case to:
- FCA: If you’re whistleblowing on fraud involving government contracts, such as healthcare or defense contracts, you’d go through the FCA claim-filing steps
- SEC: For fraud involving public companies, such as insider trading or accounting misreporting, you’d start the SEC whistleblower process
- IRS: If someone is significantly underreporting income or not complying with tax laws, you should work with the IRS
Filing correctly depends on selecting the right federal agency, so double-check with your attorney if you’re not sure.
3: File correctly
Selecting the right agency is a good start, but you’ll also need to file the correct paperwork.
- FCA: Submit a sealed complaint to the Department of Justice as a relator, along with a written disclosure statement of relevant evidence
- SEC: Submit Form TCR with original, specific facts; if a Notice of Covered Action is posted, file Form WB APP within 90 days
- IRS: Submit Form 211 to the IRS Whistleblower Office identifying the taxpayer, tax years, scheme, and estimated underpayment
Again, your legal representatives can help you if you’re struggling with the process.
4: Investigation, resolution, and payout
After you file your whistleblowing claim, the agency will evaluate your claims. In some cases, they’ll request further records or issue subpoenas. According to the SEC, the process often takes years.
The process can take years, but don’t expect too many updates. You should make sure you’re contactable throughout the case, but always respond through your lawyer.
How Much Does the SEC Give Whistleblowers?
Generally speaking, the SEC gives whistleblowers around 10-30% of monetary sanctions collected in actions totaling $1M. Here are some of the factors that could boost the percentage:
- Early reporting: The sooner you give your tip, the more likely you’ll get a favorable percentage
- Quality information: These agencies want to see original information that has enough detail to take action
- Offering assistance: The more you contribute to the investigation, the higher the percentage you’ll end up getting.
What Percentage Do Whistleblowers Get in FCA Cases?
The percentage you get in FCA cases depends on whether or not the government chooses to intervene in the case. If the Department of Justice decides to join your case after investigating, they’ll take the lead in litigation proceedings.
Aso, f the government decides to intervene in your case, you’ll typically get around 15 to 25% of the recovery. If the government doesn’t intervene, according to the Legal Information Institute, you’ll typically get 25%-30%.
FAQ
What doesn’t count as whistleblowing?
Whistleblowing entitles you to certain legal protections, but you need to be sure what you’re doing counts. Here are some examples of what doesn’t count as whistleblowing:
- Personal grievances: without a legal violation, there’s no whistleblowing case
- Policy disagreements: Federal agencies are not usually interested in this kind of public disagreement
- Public information: Without an original, qualifying analysis, it doesn’t count as whistleblowing
- Illegally obtained data: Being a whistleblower doesn’t give you the right to obtain evidence illegally
What is a Common Risk for Whistleblowers?
While whistleblowers enjoy various legal protections, it certainly isn’t risk-free. Here are some of the common risks of whistleblowing:
- Termination: While firing you for whistleblowing is illegal, some companies will try to find any reason to terminate you
- Demotion: You may not always get fired, but sometimes you might face demotion, a reduction in hours, or shift changes
- Legal threat: Whistleblowers often face legal threats such as countersuits or trade-secret claims
- Stress and burnout: The whistleblowing process is long, often leading to stress, anxiety, and burnout
- Blacklisting: In some industries, you may find it hard to find another job due to your reputation as a whistleblower.
You should know what to expect when filing a SEC or FCA whistleblower claim and have a contingency plan in place. For instance, you should be aware of your federal anti-retaliation provisions. You should also have a backup plan in case you end up terminated or have your hours cut.
Now You Know What to Expect When Filing a SEC or FCA Whistleblower Claim
Now you know what to expect when filing a SEC or FCA whistleblower claim. While whistleblowing is risky, with a results-driven legal team, you can avoid the pitfalls. Here at RHINO Lawyers, we aim to build a long-lasting partnership with every one of our clients.
Whether you’ve been involved in an auto accident, you’re the victim of medical malpractice, or you’re a whistleblower, we’re here to help you take control of the case.
We’re a community-focused legal office, and we frequently support charitable organizations and fundraisers here in Florida and Wisconsin.
Contact us today to discuss the specifics of your whistleblowing case.
