Not everyone is eligible to become a whistleblower for the U.S. Securities and Exchange Commission (“SEC”) and to receive an SEC whistleblower award. The SEC whistleblower rules define what an SEC “whistleblower” is and who can be a whistleblower. But that is not the end of the inquiry into who can be a whistleblower for the SEC.
The SEC whistleblower rules also contain a whole list of people who are “exceptions” to the definition — in other words, people who are not eligible to receive an SEC whistleblower reward.
In addition, the SEC whistleblower rules have lists of types of information that will not count toward getting an award, even if the person is otherwise qualified as a whistleblower. All of these rules should be read together.
Who Can Be A Whistleblower: How The SEC Rules Define “Whistleblower”
The first step in determining who can be a whistleblower is to look at the definition of a “whistleblower” as set forth in SEC whistleblower rule 21F-2(a)(1). According to that rule, someone is a whistleblower if:
1. They provide the SEC with information; and
2. They provide that information in accordance with the procedures set forth elsewhere in the SEC whistleblower rules; and
3. Their information relates to a possible violation of the federal securities laws that has already occurred, is presently occurring, or is about to occur.
SEC Whistleblower Eligibility Is Limited To Natural Persons
SEC whistleblower rule 21F-2(a)(1) also says that a whistleblower “must be an individual” person. A company or entity cannot be an SEC whistleblower. Only an individual person is eligible to receive an award under the SEC whistleblower program.
People Who Are Not Eligible To Receive SEC Whistleblower Awards
Rule 21F-8 of the SEC whistleblower rules contains lists of people who are not eligible to receive SEC whistleblower awards. Those people are “exceptions” to the SEC whistleblower rules’ general definition of who can be a whistleblower.
Then there are “exceptions” to those exceptions.
There are also some people who start out as “exceptions” and cannot receive an SEC whistleblower reward, unless they do certain things and wait a certain amount of time before reporting to the SEC. If they do those things, they may then be qualified to be an SEC whistleblower and eligible to receive an SEC whistleblower reward.
If this sounds confusing, it is because it is confusing. If you have questions about who can be a whistleblower, you may want to consider speaking with someone at an SEC whistleblower law firm. An SEC whistleblower lawyer can help you figure out whether you qualify as an SEC whistleblower, and whether you may be eligible to receive an SEC whistleblower award.
Some Examples Of Types Of People Who Are Excluded By The SEC Whistleblower Rules
The following are some examples of types of people listed in SEC whistleblower rule 21F-8, who are excluded from receiving SEC whistleblower awards. This is not a comprehensive list. There may be other types of people who are also excluded. Again, if you have doubts about your eligibility, or questions about the SEC whistleblower rules, you may want to consult with an SEC whistleblower attorney.
Generally speaking, someone is not eligible to receive an SEC whistleblower award if, either when they acquired their information or when they reported it to the SEC, they were:
A. Employed by the SEC, the Department of Justice, any law enforcement organization, an appropriate regulatory agency or self-regulatory organization, or the Public Company Accounting Oversight Board; or
B. A member or employee of a foreign government; a political subdivision of a foreign government; a department, agency, or instrumentality of a foreign government; or a foreign financial regulatory authority.
In addition, the following general categories of people are ineligible to receive an SEC whistleblower reward:
(i) An immediate family member of an SEC employee;
(ii) Someone living in the same household as an SEC employee;
(iii) Someone who obtained their information through a company’s audit process generally is not eligible to receive an SEC whistleblower reward;
(iv) Someone who is convicted of a criminal violation related to the SEC’s case; or
(v) A person who obtained their information from someone else who was or would be excluded, unless the information is about that person violating the securities laws.
For more information about who may be eligible for an award under the SEC whistleblower rules, click on the links below:
- SEC explains where whistleblowers come from.
- SEC explains what past whistleblower award winners had in common.
- SEC whistleblower award eligibility for domestic government employees.
- Person who failed to follow form and manner requirements “does not qualify as a whistleblower”.
- Person must provide information to the Commission to be considered an SEC whistleblower.
- SEC finds that person who did not file an SEC whistleblower tip form is “not a whistleblower”.