The front page of The Wall Street Journal yesterday carried a story about an SEC whistleblower whose identity was inadvertently exposed by an SEC enforcement attorney. SEC whistleblowers, already a nervous crowd, are no doubt made more nervous by the story. Our advice: Calm down.
The story is a simple one. A former employee possessing valuable information about securities law violations made the decision to become a whistleblower and to transmit his information to the SEC.
He hoped to maintain his anonymity, but he handed over personal notebooks that anyone who knew him would readily recognize as his. The SEC attorney investigating the matter showed the notebook to insiders at the company under investigation, who then knew who the source was. Cover blown.
It is important to bear in mind that the whistleblower went to the SEC before it had formally adopted its new whistleblower program. The new whistleblower program has special rules for tipsters who want to remain anonymous. To take advantage of the new rules about anonymous tips, whistleblowers must have legal representation. Seasoned counsel would take steps to protect the identity of the whistleblower. Experienced counsel would not have allowed a client to simply hand over distinctive notebooks that would readily identify the client without first advising the client of the risks and proposing alternative methods for presenting the information.
Our experience with the SEC is that its attorneys are seasoned veterans with fine skills. The episode never should have happened. Hopefully, it never will again.
If you have a tip on a securities law violation, you don't have to be an employee or former employee to profit as a whistleblower. Contact us. Representing SEC whistleblowers on contingency.