Whistleblower

Where the Whistleblower Rules Come From

Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), titled Whistleblower protection, added Section 21F to the Securities Exchange Act of 1934. The Dodd-Frank Act was enacted on July 21, 2010.

The Sarbanes-Oxley Act of 2002 added whistleblower protection earlier. Section 806 of that Act added Section 1514A to Title 18 of the United States Code, titled Civil action to protect against retaliation in fraud cases, and Section 301 added subsection (m) to Section 10A of the Securities Exchange Act of 1934.

The SEC applies Section 21F through rules in the 21F series. Those rules include Rules 21F-2, 21F-4, 21F-5, 21F-6, 21F-7, 21F-8, 21F-9, 21F-10, 21F-15, 21F-16 and 21F-17, and each is covered below.

Who Qualifies as a Whistleblower

Under Rule 21F-2(a), an individual is a whistleblower for purposes of Section 21F as of the time that, alone or jointly with others, the individual provides the SEC with information in writing that relates to a possible violation of the federal securities laws (including any law, rule, or regulation subject to the jurisdiction of the SEC) that has occurred, is ongoing, or is about to occur.

A whistleblower must be an individual. A company or other entity is not eligible to be a whistleblower.

Original Information

Under Section 21F(a), original information means information that is derived from the independent knowledge or analysis of a whistleblower; is not known to the SEC from any other source, unless the whistleblower is the original source of the information; and is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.

Rule 21F-4(b)(1) repeats those three conditions and adds a fourth. The information must be provided to the SEC for the first time after July 21, 2010, the date of enactment of the Dodd-Frank Act.

Independent knowledge means factual information in the possession of the individual that is not derived from publicly available sources. An individual may gain independent knowledge from experiences, communications and observations in business or social interactions. Independent analysis means the individual’s own analysis, whether done alone or in combination with others. Analysis means the individual’s examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.

Information Excluded From Independent Knowledge

Rule 21F-4(b)(4) lists the circumstances in which the SEC will not consider information to be derived from the independent knowledge or independent analysis of an individual.

The first two circumstances involve attorneys. One is information obtained through a communication that was subject to the attorney-client privilege, unless disclosure of that information would otherwise be permitted by an attorney pursuant to Section 205.3(d)(2) of Title 17 of the Code of Federal Regulations, the applicable state attorney conduct rules, or otherwise. The other is information obtained in connection with the legal representation of a client on whose behalf the individual or the individual’s employer or firm are providing services, if the individual seeks to use the information to make a whistleblower submission for the individual’s own benefit, with the same exception for disclosure otherwise permitted.

In circumstances not covered by those two, the exclusion applies if the individual obtained the information because the individual was an officer, director, trustee, or partner of an entity and another person informed the individual of allegations of misconduct, or the individual learned the information in connection with the entity’s processes for identifying, reporting, and addressing possible violations of law. It also applies to an employee whose principal duties involve compliance or internal audit responsibilities, or an individual employed by or otherwise associated with a firm retained to perform compliance or internal audit functions for an entity. It applies to an individual employed by or otherwise associated with a firm retained to conduct an inquiry or investigation into possible violations of law. It applies to an employee of, or other person associated with, a public accounting firm, if the individual obtained the information through the performance of an engagement required of an independent public accountant under the Federal securities laws (other than an audit subject to Rule 21F-8(c)(4)), and that information related to a violation by the engagement client or the client’s directors, officers or other employees.

Two further exclusions apply. The SEC will not consider information to be derived from independent knowledge or independent analysis if the individual obtained it by a means or in a manner that is determined by a United States court to violate applicable Federal or state criminal law. The SEC also will not consider the information to be derived from independent knowledge or independent analysis if the individual obtained the information from a person who is subject to Rule 21F-4, unless the information is not excluded from that person’s use pursuant to Rule 21F-4, or the individual is providing the SEC with information about possible violations involving that person.

The exclusion for the officer, director, trustee, partner, compliance, internal audit, investigation and public accounting circumstances does not apply if any one of three exceptions is met. The first is that the individual has a reasonable basis to believe that disclosure of the information to the SEC is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors. The second is that the individual has a reasonable basis to believe that the relevant entity is engaging in conduct that will impede an investigation of the misconduct. The third is that at least one hundred twenty days have elapsed since the individual provided the information to the relevant entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or the individual’s supervisor, or since the individual received the information, if the individual received it under circumstances indicating that the entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or the individual’s supervisor was already aware of the information.

Voluntary Submission

Under Rule 21F-4(a)(1), a submission of information is made voluntarily if the individual provides it before a request, inquiry, or demand that relates to the subject matter of the submission is directed to the individual or anyone representing the individual (such as an attorney) by the SEC; in connection with an investigation, inspection, or examination by the Public Company Accounting Oversight Board (PCAOB) or any self-regulatory organization; or in connection with an investigation by Congress, any other authority of the Federal government, or a state Attorney General or securities regulatory authority.

If the SEC or any of those other authorities directs such a request, inquiry, or demand to the individual or the individual’s representative first, the submission will not be considered voluntary, and the individual will not be eligible for an award, even if the response is not compelled by subpoena or other applicable law. A submission of information to the SEC will still be considered voluntary if the individual voluntarily provided the same information to one of the other authorities before receiving a request, inquiry, or demand from the SEC.

A submission is also not considered voluntary if the individual is required to report the original information to the SEC as a result of a pre-existing legal duty, a contractual duty that is owed to the SEC or to one of the other authorities listed in Rule 21F-4(a)(1), or a duty that arises out of a judicial or administrative order.

Information That Leads to Successful Enforcement

Under Section 21F(b)(1), awards are paid to whistleblowers who voluntarily provided original information to the SEC that led to the successful enforcement of the covered judicial or administrative action, or related action. Rule 21F-4(c) lists the circumstances in which the SEC will consider that an individual provided original information that led to the successful enforcement of a judicial or administrative action.

In the first circumstance, the individual gave the SEC original information that was sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation, reopen an investigation that the SEC had closed, or to inquire concerning different conduct as part of a current examination or investigation, and the SEC brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of the original information.

In the second circumstance, the individual gave the SEC original information about conduct that was already under examination or investigation by the SEC, the Congress, any other authority of the Federal Government, a state attorney general or securities regulatory authority, any self-regulatory organization, or the PCAOB (except in cases where the individual was an original source of this information as defined in Rule 21F-4(b)(5)), and the submission significantly contributed to the success of the action.

The third circumstance involves a report made first through an entity’s internal procedures and is covered under Internal Reporting and Compliance Programs below.

Covered Actions and Related Actions

A covered judicial or administrative action is any judicial or administrative action brought by the SEC under the securities laws that results in monetary sanctions exceeding one million dollars.

Monetary sanctions, with respect to a judicial or administrative action, means any monies, including penalties, disgorgement, and interest, ordered to be paid; and any monies deposited into a disgorgement fund or other fund pursuant to Section 308(b) of the Sarbanes-Oxley Act of 2002 as a result of the action or any settlement of the action.

A related action is a judicial or administrative action brought by the Attorney General of the United States, an appropriate regulatory authority, a self-regulatory organization, or a State attorney general in connection with any criminal investigation, that is based upon the original information provided by a whistleblower that led to the successful enforcement of the SEC action.

The Award Range

As of October 2026, the award range is set by Section 21F(b)(1) and Rule 21F-5(b).

Under Section 21F(b)(1), under regulations prescribed by the SEC and subject to subsection (c), the SEC shall pay an award or awards to one or more whistleblowers who voluntarily provided original information to the SEC that led to the successful enforcement of the covered judicial or administrative action, or related action, in an aggregate amount equal to not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions, and not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions.

The one million dollar figure is the threshold that makes an action a covered action. The percentage range applies to what has been collected of the monetary sanctions imposed in the action or related actions.

Under Rule 21F-5(b), the amount will be at least 10 percent and no more than 30 percent of the monetary sanctions that the SEC and the other authorities are able to collect. The percentage awarded in connection with an SEC action may differ from the percentage awarded in connection with a related action. Under Rule 21F-5(c), if the SEC makes awards to more than one whistleblower in connection with the same action or related action, the SEC will determine an individual percentage award for each whistleblower, but in no event will the total amount awarded to all whistleblowers in the aggregate be less than 10 percent or greater than 30 percent of the amount the SEC or the other authorities collect.

The determination of the amount of an award is in the discretion of the SEC.

How the Amount of an Award Is Decided

Under Section 21F(c)(1)(B), in determining the amount of an award, the SEC shall take into consideration the significance of the information provided by the whistleblower to the success of the covered judicial or administrative action; the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in a covered judicial or administrative action; the programmatic interest of the SEC in deterring violations of the securities laws by making awards to whistleblowers who provide information that leads to the successful enforcement of such laws; and such additional relevant factors as the SEC may establish by rule or regulation. The SEC shall not take into consideration the balance of the Fund.

Under Rule 21F-6, the SEC may consider the following factors (and only the following factors) in relation to the facts and circumstances of each case in setting the dollar or percentage amount of the award.

The factors that may increase the amount of a whistleblower’s award are the significance of the information provided by the whistleblower, the assistance provided by the whistleblower, law enforcement interest, and participation in internal compliance systems. For the last of these, the SEC will assess whether, and the extent to which, the whistleblower and any legal representative of the whistleblower participated in internal compliance systems.

The factors that may decrease the amount of a whistleblower’s award are culpability, unreasonable reporting delay, and interference with internal compliance and reporting systems. For culpability, the SEC will assess the culpability or involvement of the whistleblower in matters associated with the SEC’s action or related actions. For unreasonable reporting delay, the SEC will assess whether the whistleblower unreasonably delayed reporting the securities violations. For interference, the SEC will assess, in cases where the whistleblower interacted with his or her entity’s internal compliance or reporting system, whether the whistleblower undermined the integrity of such system.

Who Cannot Receive an Award

Under Section 21F(c)(2), no award shall be made to a whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the SEC, a member, officer, or employee of an appropriate regulatory agency, the Department of Justice, a self-regulatory organization, the Public Company Accounting Oversight Board, or a law enforcement organization. No award shall be made to a whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award. No award shall be made to a whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of Section 10A of the Securities Exchange Act of 1934. No award shall be made to a whistleblower who fails to submit information to the SEC in such form as the SEC may, by rule, require.

Under Section 21F(i), a whistleblower shall not be entitled to an award if the whistleblower knowingly and willfully makes any false, fictitious, or fraudulent statement or representation, or uses any false writing or document knowing the writing or document contains any false, fictitious, or fraudulent statement or entry.

Rule 21F-8(c) adds further categories. Under Rule 21F-8(c)(1), an individual is not eligible if the individual is, or was at the time the individual acquired the original information provided to the SEC, a member, officer, or employee of the SEC, the Department of Justice, an appropriate regulatory agency, a self-regulatory organization, the Public Company Accounting Oversight Board, or any law enforcement organization. An individual is also not eligible if the individual is, or was at the time the individual acquired the original information, a member, officer, or employee of a foreign government, any political subdivision, department, agency, or instrumentality of a foreign government, or any other foreign financial regulatory authority as that term is defined in Section 3(a)(52) of the Securities Exchange Act of 1934. An individual is also not eligible if the individual is the spouse, parent, child, or sibling of a member or employee of the SEC, or resides in the same household as a member or employee of the SEC.

Culpable Conduct and Awards

Under Rule 21F-15, the Securities Whistleblower Incentives and Protection provisions do not provide amnesty to individuals who provide information to the SEC. The fact that an individual may become a whistleblower and assist in SEC investigations and enforcement actions does not preclude the SEC from bringing an action against the individual based upon the individual’s own conduct in connection with violations of the Federal securities laws. If such an action is determined to be appropriate, the SEC will take the cooperation of the individual into consideration in accordance with its Policy Statement Concerning Cooperation by Individuals in Investigations and Related Enforcement Actions.

Under Rule 21F-16, in determining whether the required one million dollar threshold has been satisfied for purposes of making any award, the SEC will not take into account any monetary sanctions that the whistleblower is ordered to pay, or that are ordered against any entity whose liability is based substantially on conduct that the whistleblower directed, planned, or initiated. If the SEC determines that a whistleblower is eligible for an award, any amounts that the whistleblower or such an entity pay in sanctions as a result of the action or related actions will not be included within the calculation of the amounts collected for purposes of making payments.

Submitting a Tip

Under Rule 21F-8(a), to be eligible for a whistleblower award, an individual must give the SEC information in the form and manner that the SEC requires. The SEC may, in its sole discretion, waive any of the procedures based upon a showing of extraordinary circumstances.

Under Rule 21F-9(a), to submit information in a manner that satisfies Rules 21F-2(b) and 21F-2(c), an individual must submit the information to the SEC by any of these methods: online, through the SEC’s website at www.sec.gov, using the SEC’s electronic TCR portal (Tip, Complaint, or Referral); mailing or faxing a Form TCR to the SEC Office of the Whistleblower at the mailing address or fax number designated on the SEC’s web page for making such submissions; or any other method that the SEC may expressly designate on its website as a mechanism that satisfies Rules 21F-2(b) and 21F-2(c).

Under Rule 21F-9(b), to be eligible for an award, the individual must declare under penalty of perjury, at the time of submission by any of those methods, that the information is true and correct to the best of the individual’s knowledge and belief.

Under Rule 21F-8(b), in addition to any forms required by the rules, the SEC may also require that the individual provide certain additional information. The individual may be required to provide explanations and other assistance in order that the staff may evaluate and use the information submitted; provide all additional information in the individual’s possession that is related to the subject matter of the submission in a complete and truthful manner, through follow-up meetings, or in other forms that the staff may agree to; provide testimony or other evidence acceptable to the staff relating to whether the individual is eligible, or otherwise satisfies any of the conditions, for an award; and enter into a confidentiality agreement in a form acceptable to the Office of the Whistleblower, covering any non-public information that the SEC provides to the individual, and including a provision that a violation of the agreement may lead to ineligibility to receive an award.

Claiming an Award

Under Rule 21F-10(a), whenever an SEC action results in monetary sanctions totaling more than one million dollars, the Office of the Whistleblower will cause to be published on the SEC’s website a Notice of Covered Action. A claimant has ninety days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.

Under Rule 21F-10(b), a claimant files a claim by filing Form WB-APP, signing the form as the claimant and submitting it to the Office of the Whistleblower by mail, email (as a PDF attachment), or fax (or any other manner that the Office permits). All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety calendar days of the date of the Notice of Covered Action in order to be considered for an award.

Under Rule 21F-10(c), if the individual provided the original information to the SEC anonymously, the individual must disclose identity on the Form WB-APP, and the identity must be verified in a form and manner that is acceptable to the Office of the Whistleblower before the payment of any award.

Under Rule 21F-10(d), once the time for filing any appeals of the SEC judicial or administrative action has expired, or where an appeal has been filed, after all appeals in the action have been concluded, one or more staff members designated by the Director of the Division of Enforcement (Claims Review Staff) will evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in the rules. Following a determination by the Claims Review Staff, and an opportunity for the SEC to review that determination, the Office of the Whistleblower will send a Preliminary Determination setting forth a preliminary assessment as to whether the claim should be allowed or denied and, if allowed, setting forth the proposed award dollar and percentage amount, and the grounds therefor.

Under Section 21F(f), any determination made under Section 21F, including whether, to whom, or in what amount to make awards, is in the discretion of the SEC. Any such determination, except the determination of the amount of an award if the award was made in accordance with subsection (b), may be appealed to the appropriate court of appeals of the United States not more than thirty days after the determination is issued by the SEC.

Anonymous Submissions and Confidentiality

Under Rule 21F-7(b), an individual may submit information to the SEC anonymously. The individual must then have an attorney represent the individual in connection with both the submission of information and the claim for an award, and the attorney’s name and contact information must be provided to the SEC at the time the information is submitted. The individual and the attorney must follow the procedures in Rule 21F-9 for submitting original information anonymously. Before the SEC will pay any award, the individual must disclose identity to the SEC, and the identity must be verified by the SEC as set forth in Rule 21F-10.

Under Rule 21F-7(a), the SEC will not disclose information that could reasonably be expected to reveal the identity of a whistleblower, provided that the whistleblower has submitted information utilizing the processes specified in Rule 21F-9(a), except that the SEC may disclose such information in three circumstances. The first is when disclosure is required to a defendant or respondent in connection with a Federal court or administrative action that the SEC files or in another public action or proceeding that is filed by an authority to which the SEC provides the information. The second is when the SEC determines that it is necessary to accomplish the purposes of the Securities Exchange Act of 1934 and to protect investors, in which case it may provide the information to the Department of Justice, an appropriate regulatory authority, a self-regulatory organization, a state attorney general in connection with a criminal investigation, any appropriate state regulatory authority, the Public Company Accounting Oversight Board, or foreign securities and law enforcement authorities. The third is that the SEC may make disclosures in accordance with the Privacy Act of 1974.

Internal Reporting and Compliance Programs

Under Rule 21F-4(b)(7), if an individual provides information to the Congress, any other authority of the Federal government, a state Attorney General or securities regulatory authority, any self-regulatory organization, or the Public Company Accounting Oversight Board, or to an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law, and within one hundred twenty days submits the same information to the SEC pursuant to Rule 21F-9, as the individual must do to be eligible to be considered for an award, then for purposes of evaluating a claim to an award under Rules 21F-10 and 21F-11 the SEC will consider that the individual provided information as of the date of the original disclosure, report or submission to one of these other authorities or persons. The individual must establish the effective date of any prior disclosure, report, or submission to the satisfaction of the SEC.

Under Rule 21F-4(c)(3), the third circumstance in which the SEC will consider that an individual provided original information that led to successful enforcement is the following. The individual reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time the individual reported them to the SEC; the entity later provided the information to the SEC, or provided results of an audit or investigation initiated in whole or in part in response to information the individual reported to the entity; and the information the entity provided to the SEC satisfies either of the first two circumstances in Rule 21F-4(c). The individual must also submit the same information to the SEC in accordance with the procedures in Rule 21F-9 within one hundred twenty days of providing it to the entity.

Participation in internal compliance systems is a factor that may increase an award, and interference with internal compliance and reporting systems is a factor that may decrease an award, as the award criteria above set out.

Under Section 10A(m)(4) of the Securities Exchange Act of 1934, each audit committee shall establish procedures for the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.

Protection Against Retaliation Under Section 21F

Under Section 21F(h)(1)(A), no employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower in providing information to the SEC in accordance with Section 21F; in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the SEC based upon or related to such information; or in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002, the Securities Exchange Act of 1934, including Section 10A(m), Section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of the SEC.

An individual who alleges discharge or other discrimination in violation of that prohibition may bring an action in the appropriate district court of the United States. An individual who prevails is entitled to relief that includes reinstatement with the same seniority status that the individual would have had, but for the discrimination; two times the amount of back pay otherwise owed to the individual, with interest; and compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.

An action under Section 21F(h) may not be brought more than six years after the date on which the violation occurred, or more than three years after the date when facts material to the right of action are known or reasonably should have been known by the employee alleging a violation. In no circumstance may an action be brought more than ten years after the date on which the violation occurs.

Rule 21F-2(d)(1) sets out the criteria for the retaliation protections of Section 21F(h)(1). The individual must qualify as a whistleblower under Rule 21F-2(a) before experiencing the retaliation for which the individual seeks redress. The individual must reasonably believe that the information provided to the SEC under Rule 21F-2(a) relates to a possible violation of the federal securities laws. The individual must perform a lawful act that is performed in connection with any of the activities set out in Section 21F(h)(1)(A)(i) through (iii), and that relates to the subject matter of the submission to the SEC under Rule 21F-2(a).

Under Rule 21F-2(d)(2), to receive retaliation protection for such a lawful act, the individual does not need to qualify as a whistleblower before performing the lawful act, but must qualify as a whistleblower before experiencing retaliation for the lawful act. Under Rule 21F-2(d)(3), to qualify for retaliation protection, the individual does not need to satisfy the procedures and conditions for award eligibility in Rules 21F-4, 21F-8 and 21F-9. Under Rule 21F-2(d)(4), Section 21F(h)(1) and the rules under it are enforceable in an action or proceeding brought by the SEC.

Protection Against Retaliation Under the Sarbanes-Oxley Act

Section 1514A of Title 18, added by Section 806 of the Sarbanes-Oxley Act of 2002, is titled Civil action to protect against retaliation in fraud cases. Under Section 1514A(a), no company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, or that is required to file reports under Section 15(d) of that Act, including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company, or nationally recognized statistical rating organization, or any officer, employee, contractor, subcontractor, or agent of such company or nationally recognized statistical rating organization, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee.

The protected acts fall in two groups. The first is to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of Section 1341, 1343, 1344, or 1348 of Title 18, any rule or regulation of the SEC, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by a Federal regulatory or law enforcement agency; any Member of Congress or any committee of Congress; or a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct). The second is to file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the employer) relating to an alleged violation of Section 1341, 1343, 1344, or 1348, any rule or regulation of the SEC, or any provision of Federal law relating to fraud against shareholders.

An employee who prevails in an action under Section 1514A(b)(1) is entitled to all relief necessary to make the employee whole. That relief includes reinstatement with the same seniority status that the employee would have had, but for the discrimination; the amount of back pay, with interest; and compensation for any special damages sustained as a result of the discrimination, including litigation costs, expert witness fees, and reasonable attorney fees. An action under Section 1514A(b)(1) shall be commenced not later than one hundred eighty days after the date on which the violation occurs, or after the date on which the employee became aware of the violation.

Section 1513(e) of Title 18 adds a criminal penalty. Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under Title 18 or imprisoned not more than ten years, or both.

Rule 21F-17 and Confidentiality Agreements

Under Rule 21F-17(a), no person may take any action to impede an individual from communicating directly with the SEC staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by Rule 21F-4(b)(4)(i) and Rule 21F-4(b)(4)(ii) related to the legal representation of a client) with respect to such communications.

Under Rule 21F-17(b), if an individual is a director, officer, member, agent, or employee of an entity that has counsel, and has initiated communication with the SEC relating to a possible securities law violation, the SEC staff is authorized to communicate directly with the individual regarding the possible securities law violation without seeking the consent of the entity’s counsel.

FINRA Tips and FINRA Rule 2010

FINRA is a self-regulatory organization. It is a violation of FINRA Rule 2010, Standards of Commercial Honor and Principles of Trade, to include confidentiality provisions in settlement agreements or any other documents, including confidentiality stipulations made during a FINRA arbitration proceeding, that prohibit or restrict a customer or any other person from communicating with the SEC, FINRA, or any federal or state regulatory authority regarding a possible securities law violation. The use of confidentiality provisions in settlement agreements that prohibit or restrict a customer’s or other person’s ability to communicate directly with or in response to an inquiry from a regulatory authority constitutes conduct that is inconsistent with just and equitable principles of trade that may result in FINRA disciplinary proceedings for violation of FINRA Rule 2010.

As of October 2026, FINRA encourages individuals with information about potentially fraudulent, illegal or unethical activity to submit a regulatory tip. FINRA may find it useful to contact the individual for the purposes of verifying the information provided and soliciting additional information. While anonymous regulatory tips will be accepted and reviewed, their value may be diminished if FINRA is unable to conduct this additional inquiry. All regulatory tip information received will be treated in confidence to the fullest extent possible.

A tip to FINRA and a submission to the SEC are separate steps. Under Rule 21F-4(b)(7), if an individual provides information to any self-regulatory organization and within one hundred twenty days submits the same information to the SEC pursuant to Rule 21F-9, then for purposes of evaluating a claim to an award under Rules 21F-10 and 21F-11 the SEC will consider that the individual provided information as of the date of the original disclosure, report or submission to the self-regulatory organization. An action brought by a self-regulatory organization can be a related action when it is based upon original information provided by a whistleblower that led to the successful enforcement of the SEC action.

Exam Relevance

Candidates should check the current outline for their examination.

The SIE Exam content outline, in Section 3, Understanding Trading, Customer Accounts and Prohibited Activities, lists Topic 3.3.2, Insider Trading. That topic lists the definition of insider trading; the definition of material nonpublic information; identifying involved parties; and penalties, with fines, expulsion, and incarceration named in parentheses. The Securities Exchange Act of 1934 list for Section 3 includes Section 21A, Civil Penalties for Insider Trading, and the FINRA rules list for Section 3 includes 2010, Standards of Commercial Honor and Principles of Trade.

The SEC whistleblower program is not limited to insider trading. The statutory definition covers information relating to a violation of the securities laws. A candidate preparing for the SIE should retain that an award is at least 10 percent and no more than 30 percent of the monetary sanctions collected, that a covered action is one that results in monetary sanctions exceeding one million dollars, and that no employer may retaliate against a whistleblower for providing information to the SEC in accordance with Section 21F.

The Series 79 outline, in Function 1, Collection, Analysis and Evaluation of Data, Section 1.3, Due Diligence Activities, lists basic disclosure requirements with respect to compliance with the Sarbanes-Oxley Act, and lists the Sarbanes-Oxley Act among the SEC Rules and Regulations for that section. The Series 24 outline, in Function 2, Supervision of General Broker-Dealer Activities, Section 2.7, lists Sarbanes-Oxley, with Section 404, Management Assessment of Internal Controls, beneath it. The retaliation and complaint-procedure provisions covered above are in other parts of the same Act: Section 806 added Section 1514A to Title 18, and Section 301 added subsection (m) to Section 10A of the Securities Exchange Act of 1934.

Common Misunderstandings

A company can be a whistleblower. A whistleblower must be an individual, and a company or other entity is not eligible to be a whistleblower.

Any tip leads to an award. An award requires that a whistleblower voluntarily provided original information to the SEC that led to the successful enforcement of a covered judicial or administrative action, or related action.

A whistleblower always receives 30 percent. The aggregate award is not less than 10 percent and not more than 30 percent of what has been collected of the monetary sanctions imposed in the action or related actions, and the amount of an award is in the discretion of the SEC.

The percentage applies only to sanctions above one million dollars. The one million dollar figure is the threshold for a covered action, and the percentage range applies to what has been collected of the monetary sanctions imposed in the action or related actions.

The program covers only insider trading. The statutory definition of a whistleblower covers information relating to a violation of the securities laws.

Reporting to an employer is the same as reporting to the SEC. A whistleblower under Section 21F provides information to the SEC. A report made first through an entity’s internal whistleblower, legal, or compliance procedures keeps its original date for the award claim when the same information is submitted to the SEC pursuant to Rule 21F-9 within one hundred twenty days.

A whistleblower cannot stay anonymous. An individual may submit information to the SEC anonymously through an attorney, and must disclose identity to the SEC before any award is paid.

A whistleblower is protected from enforcement action. The whistleblower provisions do not provide amnesty to individuals who provide information to the SEC.

Anyone who learns of wrongdoing at work can claim an award. Information obtained through the attorney-client privilege, through compliance or internal audit duties, or through an investigation or audit engagement is excluded from independent knowledge in the circumstances Rule 21F-4(b)(4) lists, and the exceptions in Rule 21F-4(b)(4)(v) apply to some of those circumstances.

A confidentiality agreement can stop an employee from contacting the SEC. No person may take any action to impede an individual from communicating directly with the SEC staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by Rule 21F-4(b)(4)(i) and Rule 21F-4(b)(4)(ii) related to the legal representation of a client) with respect to such communications.

Employees of regulators can receive awards. An individual is not eligible who is, or was at the time the individual acquired the original information provided to the SEC, a member, officer, or employee of the SEC, the Department of Justice, an appropriate regulatory agency, a self-regulatory organization, the Public Company Accounting Oversight Board, or any law enforcement organization.

Key Points to Retain

A whistleblower under Section 21F is an individual, or two or more individuals acting jointly, who provides information relating to a violation of the securities laws to the SEC in a manner established by rule or regulation.

A company or other entity is not eligible to be a whistleblower.

Original information is derived from independent knowledge or analysis, is not known to the SEC from any other source unless the whistleblower is the original source, and is not exclusively derived from the sources the statute lists unless the whistleblower is a source of the information.

A submission is voluntary if it is provided before a request, inquiry, or demand that relates to its subject matter is directed to the individual or anyone representing the individual by the SEC; in connection with an investigation, inspection, or examination by the PCAOB or any self-regulatory organization; or in connection with an investigation by Congress, any other authority of the Federal government, or a state Attorney General or securities regulatory authority.

A covered action is a judicial or administrative action brought by the SEC under the securities laws that results in monetary sanctions exceeding one million dollars.

An award is not less than 10 percent and not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions, and the amount is in the discretion of the SEC.

A claimant has ninety days from the date of the Notice of Covered Action to file a claim on Form WB-APP, or the claim is barred.

An individual who submits information anonymously must have an attorney represent the individual in connection with both the submission and the claim for an award, and must disclose identity to the SEC before any award is paid.

Under Rule 21F-7(a), the SEC will not disclose information that could reasonably be expected to reveal the identity of a whistleblower who has submitted information using the processes in Rule 21F-9(a), except in the circumstances the rule lists.

Information provided to the Congress, another Federal authority, a state Attorney General or securities regulatory authority, a self-regulatory organization, the PCAOB, or an entity’s internal whistleblower, legal, or compliance procedures keeps its original date for an award claim when the same information is submitted to the SEC pursuant to Rule 21F-9 within one hundred twenty days.

No employer may retaliate against a whistleblower in the terms and conditions of employment for the lawful acts Section 21F(h)(1)(A) lists. A prevailing individual receives reinstatement, two times back pay with interest, and compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.

Section 1514A of Title 18, added by Section 806 of the Sarbanes-Oxley Act of 2002, prohibits the companies and persons it lists from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against an employee in the terms and conditions of employment for the lawful acts the section lists. An action under Section 1514A(b)(1) shall be commenced not later than one hundred eighty days after the date on which the violation occurs, or after the date on which the employee became aware of the violation.

Under Rule 21F-17(a), no person may take any action to impede an individual from communicating directly with the SEC staff about a possible securities law violation, and under FINRA Rule 2010 it is a violation to include confidentiality provisions in settlement agreements or any other documents that prohibit or restrict a customer or any other person from communicating with the SEC, FINRA, or any federal or state regulatory authority regarding a possible securities law violation.

The SIE Exam content outline lists Topic 3.3.2, Insider Trading, with penalties, and Section 21A, Civil Penalties for Insider Trading, in Section 3.