Sean McKessey, Chief of the SEC Office of the Whistleblower, Discusses the SEC’s Process for Handling Tips From Whistleblowers

In a newly released video, Sean McKessey, Chief of the Securities and Exchange Commission Office of the Whistleblower, provides helpful and instructive responses to a series of questions. Mr. McKessy emphasizes several key points, including that tips should be as specific as possible, and whistleblowers should feel free, and indeed are encouraged, to update the SEC with anything useful they learn after submitting a tip. In addition, whistleblowers should make sure to understand which factors the SEC uses to determine whistleblower award amounts, and understand that SEC investigations and enforcement actions can be slow by nature and require patience.  

According to Mr. McKessey, SEC whistleblower tips, which may be submitted anonymously if the whistleblower is represented by counsel, should be as specific, credible, and timely as possible, since high-quality information provides the best starting point for SEC investigators. Upon receipt of a tip, SEC attorneys and staff review the whistleblower’s information and determine whether to open an investigation or retain the tip for future consideration. Mr. McKessey repeatedly emphasizes that submitting an initial tip need not be a whistleblower’s only and final interaction with the SEC: it is also useful for the whistleblower to inform the SEC of any new information about which he or she learns, as this information may be of vital significance to investigators. As Mr. McKessey notes, “You never know what information may be the last piece of the puzzle for an investigation” (see http://www.sec.gov/about/offices/owb/081012owb-seanmckessey.wmv).   

If the SEC decides to pursue an enforcement action and obtains sanctions of more than $1 million, a Notice of Covered Action is posted on the Office of the Whistleblower website (see http://www.sec.gov/whistleblower). If a whistleblower recognizes the action as resulting from the tip he or she submitted, the whistleblower has 90 days after the SEC has posted its Notice in which to apply for an award. In these circumstances, whistleblower awards can range from 10-30% of the monetary sanctions collected by the SEC. In considering the whistleblower’s award request, the SEC considers a number of factors. Among the factors that can positively influence awards are the significance of the information and the assistance provided by the whistleblower.

If you believe you have a tip under the SEC Whistleblower Program, contact attorney Ian McLoughlin at imcloughlin@shulaw.com, or call (617) 439-3939 or (800) 287-8119. Alternately, click here to contact us through our website.