How to Become a Whistleblower

Making the choice to expose corporate deceit and wrongdoing is an honorable act of integrity. Whistleblowers play a vital role in today’s legal landscape by bringing hidden fraud to light, especially in cases that may otherwise go unnoticed. Programs like the SEC (U.S. Securities and Exchange Commission) Whistleblower Program were created to support and protect individuals willing to take a stand, offering legal protections and even financial rewards for those who report misconduct. 

We understand that this decision can raise concerns about both personal and professional risks. But with the right guidance, your courage can lead to meaningful change, helping protect others from harm and reinforcing accountability in our systems.

What is a Whistleblower?

A whistleblower is someone who reports illegal or unethical activities happening within an organization. This role is vital, serving as a check on activities that may harm the public, other employees or even the organization itself. Whistleblowers are found across many industries, from finance and healthcare to government contracting.

Before this program, regulators had a hard time finding violations of securities laws because they mostly depended on companies to self-report or be caught during audits. As financial markets became more complex, regulators struggled to uncover hidden fraud. The SEC whistleblower program changed that by encouraging people with inside knowledge to come forward. Many potential whistleblowers feared damaging their careers by reporting wrongdoing. 

The SEC Whistleblower Program, created under the Dodd-Frank Act after the 2008 financial crisis, encourages individuals to report financial misconduct. The program offers anonymity, protection from retaliation and financial rewards. Since its inception, the program has led to over $6 billion in fines, with whistleblowers eligible to receive 10-30% of penalties collected when fines exceed $1 million. This program has strengthened transparency and accountability within financial markets by empowering individuals with insider knowledge to come forward. These rewards come from the fines paid by the companies that violated the law, not from taxpayers or harmed investors. However, if a company can’t pay the fine, such as when it’s bankrupt, the whistleblower may not get their reward.

Why Become a Whistleblower? 

A strong sense of duty often drives whistleblowers to act, especially when fraud or negligence threatens public well-being. For some, anger at repeated misconduct fuels their resolve, while others are motivated by a commitment to justice and transparency, knowing their actions can lead to meaningful change.

While these motivations are often primary, financial rewards are also available through programs like the SEC Whistleblower Program, which provides 10-30% of collected fines when a whistleblower’s information leads to enforcement actions.

One powerful example of whistleblowing’s impact is Sherron Watkins, a former vice president at Enron. In 2001, Watkins discovered that Enron had been hiding billions in debt to inflate its earnings. Rather than staying silent, she documented her findings and alerted the CEO, ultimately triggering investigations that exposed Enron’s massive fraud.

Her actions led to the company’s collapse, the prosecution of top executives and the creation of the Sarbanes-Oxley Act — a law that increased financial transparency and reshaped corporate governance across the U.S. Watkins’ courage demonstrated how one person’s choice to speak up could lead to widespread change.

Who Can Participate in the Program? 

The SEC Whistleblower Program is open to individuals who possess inside information about violations of U.S. securities laws. This includes employees, contractors and even those who may have participated in the misconduct. Individuals involved in the wrongdoing can still qualify for a reward, although it may be reduced — unless they have been criminally convicted.

Certain professionals — like attorneys, compliance officers or auditors — may also qualify in specific circumstances. For instance, they may be eligible if reporting is necessary to stop ongoing fraud or to address an urgent threat to investors. Typically, however, compliance and audit professionals are encouraged to let their company address the issue first, unless there is a serious risk.

Employees who report violations within their company can qualify for a reward if they notify the SEC within 120 days of reporting the issue internally. Additionally, honest companies can report illegal actions by competitors, though only individuals acting on the company’s behalf may receive a reward.

Given the specific conditions and eligibility requirements, consulting a whistleblower attorney can be invaluable in assessing your eligibility and guiding you through the process to strengthen your case. 

How To Become a Whistleblower: Step-by-Step Guide

1. Document Your Concerns: Gather supporting evidence, such as emails, records or other relevant documents. Detailed records are essential for strengthening your claim and establishing credibility.
2. Contact an Experienced Whistleblower Attorney: Partnering with a skilled attorney not only helps protect your identity but also ensures your claim is filed properly. Whistleblower cases can be complex, and expert guidance is essential to protect your rights and maximize the impact of your claim.
3. File the Claim: Your attorney will guide you on where to file your claim, which may involve agencies like the SEC, IRS or Department of Justice (DOJ), depending on the type of misconduct. They’ll also explain relevant laws, such as the False Claims Act and Dodd-Frank, which provide pathways for whistleblower claims.
4. Protect Yourself from Retaliation: Anti-retaliation laws, such as those in the Sarbanes-Oxley Act, protect you from unfair treatment or dismissal after filing a claim. These laws ensure that whistleblowers have legal protections if faced with retaliatory actions from employers.

Understanding Whistleblower Rewards

Under laws like the FCA and Dodd-Frank, whistleblowers are eligible for rewards if their information leads to enforcement actions resulting in financial penalties. Awards can range between 10-30% of the total fines collected, which, in major securities fraud cases, can be substantial. The largest SEC whistleblower reward to date was nearly $279 million, reflecting the seriousness with which these cases are taken.

Legal Protections for Whistleblowers

Whistleblowers are protected from retaliation under two key laws: Sarbanes-Oxley (SOX) and Dodd-Frank. Both laws safeguard against actions like firing, harassment or demotion, but they work differently. SOX provides protections for whistleblowers who report misconduct internally (to their supervisor) or externally (to the government). However, it requires whistleblowers to file a complaint with OSHA before pursuing court action. In contrast, Dodd-Frank only covers whistleblowers who report directly to the government, allowing them to take direct legal action without going through OSHA.

Additionally, one of the strongest protections available is the ability to report anonymously through an attorney, ensuring that even the SEC does not know the whistleblower’s identity. This added layer of anonymity provides crucial protection for those concerned about retaliation.

Together, these laws offer critical security for whistleblowers, allowing them to bring sensitive information forward with confidence and peace of mind.

What Types of Fraud Can Whistleblowers Report?

Whistleblowers play a crucial role in exposing fraud across various industries, including: 

• Corporate Fraud: This includes securities fraud, insider trading and accounting fraud, where companies deceive investors or manipulate financial statements. For instance, misrepresenting earnings to boost stock prices can harm shareholders and destabilize financial markets.
• Healthcare Fraud: Common in Medicare or Medicaid billing, healthcare fraud may involve billing for services not provided, unnecessary procedures or inflated costs. Such fraud not only drains taxpayer resources but also compromises patient care and the integrity of healthcare systems.
• Government Contracting Fraud: In government contracting, false claims can include overbilling, substituting lower-quality materials or failing to meet contract terms. This type of fraud wastes taxpayer money and may put public safety at risk if the contract involves critical infrastructure or defense projects.
• Bribery and Corruption: Violations of the Foreign Corrupt Practices Act (FCPA) include bribing foreign officials to secure business deals. This not only disrupts fair competition but can also harm international relations and encourage unethical business practices globally.
• Tax Fraud: Whistleblowers can report tax evasion schemes, such as underreporting income or creating false deductions. Tax fraud reduces revenue for public services and unfairly shifts the tax burden to law-abiding taxpayers.
• Environmental Fraud: In cases where companies violate environmental laws, whistleblowers may report actions like illegal dumping, concealing emissions or falsifying environmental reports. This type of fraud can endanger ecosystems and public health, often with long-lasting consequences.

Each of these types of fraud impacts more than just financial losses — they can harm consumers, the environment and public trust. Whistleblowers who report these actions help to uphold transparency and accountability, often bringing about reforms to prevent future violations.

What Legal Violations Does the SEC Care About the Most?

In our opinion, the SEC focuses on violations that harm investors, with an emphasis on these areas:

• Corporate and Accounting Fraud
• Health Care Fraud
• Sales and Embezzlement Fraud
• Ponzi Schemes
• Broker-Dealer Fraud

Another big area is violations of the Foreign Corrupt Practices Act (FCPA), which often involve companies bribing foreign officials for business deals. These violations can result in some of the largest fines.

Frequently Asked Questions

Can I file a claim anonymously?

Yes, you can file a claim anonymously through the SEC Whistleblower Program, but you’ll need an attorney to ensure your identity is protected throughout the process.

Do I need a lawyer to file a whistleblower claim?

Technically, you don’t need a lawyer to file a whistleblower claim. However, an experienced attorney can be invaluable in protecting your identity, properly filing your claim and advising you on legal protections and strategies to strengthen your case. 

How long do I have to file a claim?

Each whistleblower law has its own statute of limitations, so it’s important to act promptly, as missing the deadline could make you ineligible for rewards and protections. An attorney can help clarify the specific timelines for your case and ensure you meet the necessary deadlines.

Ready To Take the First Step?

If you are feeling uncertain about where to begin, that’s completely normal. At Sonn Law Group, our attorneys are here to guide you through the process, helping you take that first step with confidence.

Contact us today to receive a free consultation — together, we’ll discuss your options and ensure you have the support and knowledge you deserve.

DISCLAIMER: This article contains opinions and not statements of fact in any way whatsoever. The information here is general information that should not be taken as legal advice. No attorney-client relationship is established between you and our attorneys by reading this article. This article is attorney advertising and should not be used as a substitute for legal advice from a qualified lawyer.