Chicago Business Litigation Lawyer Blog
Filing a Claim
So, the SEC has taken your information and executed a successful enforcement action worth more than $1 million against the offender. Now what?
Once the action has been successfully executed, the Office of the Whistleblower will publish a “Notice of Covered Action” on the SEC’s website, after which the whistleblower involved will have 90 days to file a claim for an award based on that action. This means whistleblowers need to monitor the SEC’s website because they will not be contacted directly if an action involving information they provided has concluded. Filing for a claim means filling out a Form WB-APP and either mailing or faxing a signed copy to the Office of the Whistleblower. You should know that the SEC is a stickler for the time frame provided and also for whistleblowers filling out Form WB-APP completely and honestly.
Contesting a Preliminary Determination
Once an action involving a whistleblower has been fully appealed or the allotted time frame for filing an appeal has expired without an appeal having been filed, the Claims Review Staff will review all the submitted award claims and issue a preliminary determination. The whistleblower then has 60 days to contest either the denial of an award or the proposed amount of a granted award. When deciding whether to contest a preliminary determination, a whistleblower can request to review certain materials related to the decision-making process. If they want to do that, they have only 30 days to file their request.
Before providing any documents, the SEC will require the whistleblower to sign a non-disclosure agreement, which is fairly standard. If they refuse to sign, the SEC can refuse to provide the requested documents. Even when they do provide the requested documentation, the SEC can choose which documents to provide and which to withhold, and even the ones provided are usually heavily redacted.
If a whistleblower does not contest the preliminary order in the allotted amount of time, then the preliminary determination becomes a final order and cannot be appealed to a federal court.
The Exceptions
The SEC has been known to grant exceptions to one or more of these rules, but only if the whistleblower can cite “extraordinary circumstances.” Since the SEC does not want to grant an overabundance of exceptions, it strictly defines “extraordinary circumstances” as anything outside the whistleblower’s control that prevented them from taking the proper administrative steps or from taking those steps in the time allotted. If it was a timing issue (such as illness or ineffective counsel), the whistleblower is required to make up for the lost time as soon as possible.
Now that you know all the requirements for filing a claim for a whistleblower award as well as how to contest the amount if you think it’s unfair, Part 4 is going to discuss how to the SEC goes about calculating the award amount and allocating awards when a case involves more than one whistleblower. Continue reading ›