California: A Hot Spot for SEC Whistleblower Tips

Alongside its long-established firms and organizations, California continues to assert its vibrant startup culture, boasting a powerful amalgamation of talented creatives and abundant financial resources. A philosophy of innovation and risk-taking encourages great rewards but can also present situations that lead to SEC investigations and subsequent enforcement action. The state has a growing importance in the commission’s administration, given the number of tips regarding violations like securities fraud, broker-dealer misconduct, stock manipulation, Ponzi schemes, and employee retaliation. California’s best-in-class whistleblower attorneys are more vital than ever.

You might assume a traditional financial hub like New York would be home to the most SEC enforcement actions, given the number of companies there and their millions of employees. However, between 2011 and 2018, the 2,046 whistleblower tips submitted from California were more than twice the number submitted from second-place New York.

Most whistleblowers choose to remain publicly anonymous, and with enhanced confidentiality protections, more are coming forward. For instance, the SEC received a record-breaking 12,300 tips in 2022. With more incentives, the SEC has also issued more enforcement action than ever before, speaking to the success of its program. From 2020 to 2023, the record for financial compensation awarded to SEC whistleblowers was broken twice—$114 million and $279 million, respectively. Since the commission adopted the program, over $2 billion has been awarded to whistleblowers with valuable information.

With recent changes in its whistleblower program, the SEC is increasing the potential compensation in financial awards. Whistleblowers will now be paid for their information and assistance in connection with non-SEC actions, and the commission may now consider the dollar amount of a potential award for increasing an award but not lowering it.

California SEC whistleblowers can earn between 10 and 30 percent of successful enforcement actions resulting in monetary sanctions exceeding $1 million, but that depends on several factors. The SEC’s report provides guidelines:

• Assistance provided by the whistleblower: SEC whistleblower must come forth before any enforcement action from the commission or otherwise. Moreover, the more help a whistleblower provides, the higher the compensation.
• Significance of the information: While knowledge of any SEC violation can lead to financial compensation, the amount usually depends on the impact of the whistleblower’s information.
• Participation in internal compliance and reporting: Although the SEC doesn’t require whistleblowers to first report allegations internally, their award percentage may be increased if they do.
• Law enforcement interest: With California securities violations, the misappropriation of investor funds in California, and other illegal activities, the interest from law enforcement for evidence gathering is normally quite high.

Despite the potential financial awards, becoming a California SEC whistleblower can be a daunting process. It’s not uncommon for whistleblowers to experience retaliation from employers, and the SEC doesn’t pursue every claim it receives. This doesn’t mean you shouldn’t come forth with information on California securities violations, however—it just means you need the professional assistance of an experienced SEC and Ponzi scheme lawyer, especially if you choose to remain anonymous.

The Silver Law Group and the Law Firm of David Chase have created a strategic alliance to represent SEC whistleblowers like you. With years of experience representing California whistleblowers, coupled with an SEC Enforcement lawyer on our team, we have an in-depth understanding of the SEC Whistleblower Program. The program authorizes the SEC to pay awards for original information about any violation of federal securities laws, including the following:

• Accounting fraud
• Broker-dealer and stockbroker misconduct
• Commodities and futures fraud
• Foreign bribery or FCPA violations
• Inadequate or non-compliance with internal reporting systems
• Investment adviser fraud
• Market manipulation
• Offerings of fraudulent or unregistered securities
• Ponzi scheme

If you’re an insider at a company that you believe is violating federal securities laws, get in touch with our offices today. Attorneys with the Silver Law Group and the Law Firm of David Chase understand what the SEC seeks in uncovering violations, including how California SEC whistleblowers can maximize their potential awards after successful enforcement actions. For a free, confidential consultation with an SEC whistleblower attorney and to become a California SEC whistleblower, contact Silver Law Group and the Law Firm of David Chase by email or call us today at (800) 975-4345.