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SEC Whistleblower Protection NY Employees and Others Have Available

When someone discovers a fraud or securities violation at the place where they work, or being committed by someone they do business with, they have the option of reporting what they know to the Securities and Exchange Commission (SEC) under the SEC whistleblower award program.  Generally speaking, if the SEC brings an action based in whole or in part on that information, in which it collects more than $1 million, and if all other requirements are met, it is required to give the SEC whistleblower(s) an award of 10% - 30% of what it collects from the wrongdoers in that action.  People who are considering whether to report to the SEC often wonder what SEC whistleblower protection NY employees, or employees in other states, have available to them.  If you are one of those people, while you should consult with your own SEC whistleblower attorney, there are some general things that you can keep in mind.


One SEC whistleblower protection NY employees and others should be aware of is that employers are not allowed to prevent their employees from reporting frauds or securities violations to the SEC.  For example, the SEC whistleblower Rules state that an employer may not enforce or threaten to enforce a confidentiality agreement to prevent an individual from reporting a possible securities law violation to the SEC.  (SEC Rule 21F-17(a).)  In a FINRA arbitration proceeding, settlement agreements, discovery stipulations and other confidentiality agreements cannot “prohibit or restrict a customer or any other person from communicating with the Securities and Exchange Commission (SEC) … regarding a possible securities law violation.”  (FINRA Regulatory Notice 14-40.)  Even before the Dodd-Frank Act created the SEC whistleblower program, some courts had already ruled that it is against public policy to enter into agreements not to report frauds or other crimes to the government.  For example, in Chambers v. Capital Cities/ABC, the court said that “it is against public policy for parties to agree not to reveal … facts relating to alleged or potential violations of law.”  (159 F.R.D. 441, 444 (S.D.N.Y. 1995).)

Another SEC whistleblower protection NY employees have is the right not to be retaliated against by their employers for reporting securities law violations to the SEC.  Employers cannot discharge, demote, suspend, threaten, or harass someone “in the terms and conditions of employment” because of any lawful act that person does “in providing information about possible securities law violations to the Commission”.  (15 U.S.C.A. §78u-6(h)(1)(A)(i).)

The Dodd-Frank Act allows an SEC whistleblower who has been retaliated against by his or her employer to bring a lawsuit in federal court.  It also allows the SEC to bring its own enforcement action against the employer for illegally retaliating against one of its SEC whistleblowers.  The SEC brought its first enforcement action against an employer for illegally retaliating against an SEC whistleblower in June 2014. (In the Matter of Paradigm Capital Management and Candace King Weir.)  In a press release about that case, the Chief of the SEC’s Office of the Whistleblower said “We will continue to exercise our anti-retaliation authority in these and other types of situations where a whistleblower is wrongfully targeted for doing the right thing and reporting a possible securities law violation.”  (SEC Press Release 2014-118.)

The requirements and conditions for someone to receive an SEC whistleblower award are complicated.  The rules that apply to SEC whistleblower protection are different depending on what state the SEC whistleblower lives or works in.  If you are thinking about becoming an SEC whistleblower, you may want to consider having an SEC whistleblower attorney explain those laws and rules to you.

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Jason Pickholz -

The Pickholz Law Offices represents U.S. and international clients in securities and white collar cases. The Firm has helped whistleblowers report frauds to the SEC, CFTC, and IRS, and has defended clients in investigations by the SEC, CFTC, DOJ, FINRA, and other financial and securities enforcement regulators.

The Firm’s founder, Jason Pickholz, is the author of the two-volume book Securities Crimes, has appeared on tv and radio, and has taught continuing legal education courses. A former BigLaw partner, he has been representing clients in financial and securities fraud cases since 1995. In recognition of his many achievements, Mr. Pickholz was elected by his legal peers to be a Fellow of The New York Bar Foundation, an honor limited to just 1% of all attorneys in the New York State Bar Association.

Mr. Pickholz has been counsel in many high-profile cases. He was the first attorney ever to win an SEC whistleblower award on appeal to the Commission, which Inside Counsel magazine called one of the five key events in the history of the SEC whistleblower program. On the defense side, Mr. Pickholz has defended clients in the SEC’s COVID-19 investigations, the CFTC’s cryptocurrency cases, and a former US Senator, among others.

If you want to speak with a CFTC, IRS, or SEC whistleblower lawyer, or with a white collar defense lawyer, you can call the Firm at 347-746-1222.

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