A recent battle between what appear to be amateur investors and certain hedge funds over GameStop’s stock has renewed interest in whistleblowing in the stock market.
On January 28, a reddit user claiming to be a Robinhood employee posted stating that Robinhood’s founder had “received calls from Sequoia Capital and the White House that pressured into closing trading” on certain stocks. The post went viral on social media, prompting online discussions about how to blow the whistle, as well as calls for whistleblowers to disclose evidence to journalists.
From Robinhood employee posted to Reddit pic.twitter.com/dGgQFZogiL
— Justin Kan (@justinkan) January 28, 2021
While the information in the post may not be real, the post’s wide reach on social media means that responses with inaccurate information or incomplete advice about whistleblowing have the potential to mislead real whistleblowers who read them.
The post and subsequent comments reflect legitimate concerns that a whistleblower whose identity is revealed could be fired or “blacklisted” in the industry. The best way for whistleblowers to protect themselves from retaliation is indeed by reporting confidentially or even anonymously.
However, anonymous internet disclosures or reports to journalist are not the only, nor the best way, for whistleblowers with evidence of stock market fraud to ensure that they are protecting themselves from retaliation. Whistleblowers who report to the media may also be giving up the ability to qualify for a reward.
Willing to blow the whistle? #Whistleblower law is complicated & journalists cannot provide legal guarantees or ensure that whistleblowers will be given protection & #awards for their help. Get #counsel first. Only an #attorney must put your interests first.
— Siri Nelson (@SiriNelsonEsq) January 29, 2021
Since the Dodd-Frank Act was passed in 2010, whistleblowers with evidence of securities and commodities fraud have been able to report to the SEC’s whistleblower program – while keeping their identity confidential or even anonymous. In order to report anonymously, whistleblowers must be represented by counsel. Due to the complexity of U.S. whistleblowers laws, an experienced whistleblower attorney can help a whistleblower take advantage of the strongest protections and rewards possible.
Whistleblowers who provide original information to the SEC that leads to a successful prosecution are also entitled to 10-30% of the monetary reward. Since the Dodd-Frank Act was passed in 2010, the SEC and CFTC have recovered over $2 billion, while more than $487 million has been awarded to whistleblowers.
A recent announcement from the SEC underscores how whistleblowers stand to benefit from using the Dodd-Frank Act. In December, Robinhood Financial agreed to pay $65 million to settle allegations from the SEC that the company had misled customers about revenue sources. On January 29th, the SEC posted a Notice of Covered Action related to the settlement with Robinhood, allowing whistleblowers to file claims related to this settlement. Due to the Dodd-Frank’s whistleblower rewards provision, whistleblowers whose information led to this previous settlement could now be eligible for a reward of USD6.5 million to USD19.5 million.
The SEC is now investigating potential fraud related to the recent market volatility. Acting SEC Allison Herren Lee said in a statement that the SEC is looking at “compliance with regulatory obligations, adequate and consistent risk disclosure, and determining if any fraudulent or manipulative behavior has occurred,” Bloomberg reported this week. It is essential that whistleblowers who may have evidence of fraud related to these events receive accurate and up-to-date information on the strongest protections and rewards possible for them.
As a nonprofit dedicated to protecting and rewarding whistleblowers around the world, the National Whistleblower Center provides extensive educational resources both for whistleblowers and the general public. Potential whistleblowers can learn more about their rights from the National Whistleblower Center’s online resources and they can also learn more about how NWC helps whistleblowers find attorneys through our Legal Assistance Program here. The general public can also take advantage of these resources to ensure that whistleblowers they may communicate with or influence have a strong understanding of how to secure the best protections and rewards available.