The United States Securities and Exchange Commission (SEC) strongly encourages the public to submit any suspected violations. The mission of the SEC is to protect investors, maintain fair markets, and support capital formation. Many people are unaware that the SEC is not part of the United States financial system. Instead, it serves the people by providing important safeguards.
As a result of the SEC’s efforts, any reports of securities fraud are investigated, including Ponzi schemes, theft, manipulation of stock prices, insider trading, and more.
What Is a Whistleblower?
The SEC accepts reports of suspected wrongdoing from anyone, including whistleblowers and non-whistleblowers. This is an important distinction because a whistleblower who reports wrongdoing could be facing personal consequences.
Some examples of securities fraud include:
- Lying about revenue and profits
- Misleading investors about the approval of a patent
- Misleading investors about the approval of a product
- Lying about the results of an audit
- Lying about the true nature of their partnership with other businesses
- Mismanagement of invested funds
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When someone reports that their employer is violating laws or regulations, whether it is a business or the government, they are considered a whistleblower. Under the law, whistleblowers have certain protections as their report could result in retaliation from their employer.
What Information Must You Include
When you file a complaint with the SEC, you will need to provide your full name and contact information, including mailing, address, email, and telephone. It is possible to report an SEC violation anonymously, although you may not learn what action is taken against the company or governmental agency.
You will also need to provide contact information for the company or agency you are reporting as well as the names of any individuals you believe are involved. A detailed description of the events must also be included. This should explain who was involved as well as the how, what, when, and why.
Include any documentation you have, as well. Keep in mind that all information provided must be truthful to your knowledge. If you are found to have made false statements, you could face criminal sanctions.
After You File
Once the SEC receives the report, their staff evaluates the information submitted. The SEC’s regular practice is to conduct investigations on a confidential basis. This preserves the investigative process and protects those who may be innocent.
Under the Freedom of Information Act, the SEC may not disclose whether there is an investigation or even if there is no investigation unless the matter is part of a public record, such as in the courts. Any information you provide may also be used in routine operations, which may include regulation of securities markets, law enforcement, and review of procedures.
Whistleblower Protections
The SEC does extend special protections to those who are deemed whistleblowers. These include enhanced confidentiality and protections against retaliation. Because there are additional confidentiality protections, the SEC may not be able to share your identity with other agencies.
If the problem is with an individual broker or professional, it is likely your information could be shared with other agencies. However, if it is a complaint that involves large scale violations, your identity may be kept hidden until the investigation is complete.
If you have been the victim of securities fraud, you may be able to file your complaint with the SEC on your own. However, SEC complaints can be complicated, and it is often better to use an experienced attorney who understands the process. An experienced security litigation attorney can help you file your complaint and guide you through the process, which can be time-consuming and complicated.
Whether you are a whistleblower who needs additional protections or just an average citizen who has been the victim of securities fraud, an attorney can help you get any compensation you are entitled to.