Employees may file whistleblower claims when their employers violate United States securities laws. The Investor.gov website outlines federal laws covering securities investments. The Securities Act of 1933, for example, requires companies to provide their investors with accurate and complete information.
Federal laws prohibit stock market misconduct. Employees may report unlawful activities such as their employers manipulating stock prices. Whistleblowers may also report individuals within the company making trades based on insider information.
Accurate and complete information
The U.S. Securities Exchange Commission regulates companies issuing public stocks. The SEC requires submitting audited or certified financial statements. Companies must also provide accurate information about their management teams. Registration forms need to describe business operations and list assets and properties.
Companies with at least $10 million worth of assets and 500 shareholders need to file regular public reports with the SEC. If any of the documents contain false or misleading statements, employees may report them.
Evidence and whistleblower awards
The SEC’s Office of the Whistleblower website lists the type of information to submit. Accounting records, for example, may show figures that differ from those in public reports and could reveal misconduct. In some cases, a company may provide investors with inaccurate information. Unlawful conduct also includes selling unregistered securities or bribing public officials.
As described on the SEC.gov website, whistleblowers may receive financial awards between 10% and 30% of the proceeds from collected sanctions. The monetary sanctions must, however, total at least $1 million. The U.S. Department of Justice notes that the term “Qui Tam” reflects the complaint filing and award actions.
In May of 2023, the SEC awarded its largest whistleblower award of approximately $279 million. The whistleblower submitted written information and provided several interviews that helped the investigation.