Financial Fraud, Investment Fraud, and Corporate Misconduct
Whistleblowers play a critical role in protecting our financial systems and markets and holding corporations accountable to investors, consumers, and regulators alike. Whether it’s their knowledge of market or accounting manipulation, Ponzi schemes, insider trading, , cryptocurrency scams, cybersecurity violations, money laundering, bid-rigging, tax evasion, shoddy lending practices, or any number of other types of misconduct, whistleblowers who speak up about wrongdoing protect the integrity of the markets on which our economy depends.
In an effort to cast a net wide enough to catch fraudsters who might otherwise escape civil liability, Congress has created numerous whistleblower programs to combat financial fraud and corporate misconduct. For example, through the Dodd-Frank whistleblower programs, whistleblowers can alert the Securities & Exchange Commission or the Commodity Futures Trading Commission to fraud in the global markets, including fraud on investors. In the securities world, these schemes take many shapes, from misrepresenting or omitting information material to investors, to insider trading, accounting fraud, market manipulation, and other frauds on the market. In the derivatives market (from the old-school futures contracts in agricultural, metal, and fuel commodities to the newer derivatives in futures, options, swaps, and foreign or digital currencies), whistleblowers can alert the CFTC to spoofing, front-running, and wash-trading schemes, or any number of other manipulative, fraudulent, or deceptive practices. Through the IRS program, whistleblowers can alert the IRS when corporations or individuals have underpaid taxes through schemes like using offshore shell companies or trusts to hide income, claiming tax credits improperly, failing to report income from digital asset transactions, and the like
The attorneys at Morgan Verkamp have decades of experience representing whistleblowers and working with government attorneys and investigators. We know the challenges whistleblowers face in pursuing accountability. Whether the basis for your claim is non-public information you gained in the course of your employment, information you received as an investor or potential investor, or public information that you have analyzed, it can be of interest to government enforcement agencies. Our experienced whistleblower attorneys have the ability to present your knowledge of financial and investment fraud or corporate misconduct in the most effective way, no matter how complex the underlying scheme, and pursue your claims for a whistleblower reward.
Financial Fraud Whistleblower Reward Programs
These whistleblower programs provide whistleblowers with avenues to get their concerns in front of enforcement agencies and the courts – and can provide whistleblower rewards to those whose information leads to a recovery by the government.
Among the financial and investment fraud whistleblower reward programs are:
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The Securities & Exchange Commission Whistleblower Program.
Created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC Whistleblower Program is designed to help the SEC identify and stop securities law violations. The SEC Whistleblower Program has resulted in the recovery of billions of dollars in sanctions from wrongdoers – and billions in rewards for whistleblowers. The popularity of the SEC Whistleblower Program has resulted in thousands of tips from whistleblowers every year. This makes it critical for whistleblowers to be represented by experienced attorneys. Examples of these types of frauds include:
- Material misrepresentations or omissions in SEC filings, earnings calls, investor alerts, or other public statements
- Unregistered securities
- Regulatory violations regarding cybersecurity, money laundering, customer protection, and more
- Insider trading
- Pump-and-dump schemes
- Spoofing schemes
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The Commodity Futures Trading Commission Whistleblower Program.
Also created by Dodd-Frank, the CFTC Whistleblower Reward Program provides an avenue to report violations of the Commodity Exchange Act. The CFTC Whistleblower Program has resulted in the payment of billions of dollars in monetary sanctions, and hundreds of millions in whistleblower rewards. Examples of these types of frauds include:
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- Market manipulation
- Virtual currency fraud
- Corrupt practices in the commodities and derivatives markets
- Precious metals fraud
- Fee scams
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The Internal Revenue Service Whistleblower Program.
Congress created the IRS Whistleblower Program in 2006 as a reporting and award mechanism for whistleblowers with information about tax fraud or violations to submit that information to the IRS. This program requires whistleblowers to provide information that an individual or corporate taxpayer is avoiding or underpaying a tax obligation to the federal government. To eligible for an award, a whistleblower’s information must substantially contribute to a tax matter with proceeds in excess of $2 million, or to an individual whose gross income exceeds $200,000. Various states, such as New York, Illinois, and California also have tax related state whistleblower programs.
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Anti-Money Laundering Whistleblower Program.
This program, launched in 2021, provides for mandatory awards to whistleblowers who bring forward information about violations of the Bank Secrecy Act (BSA), money-laundering, or related to violations of U.S. trade and financial sanctions to the Financial Crimes Enforcement Network (FinCEN). Certain money-laundering violations may also be actionable under the SEC or CFTC whistleblower programs.
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Kleptocracy Asset Recovery Rewards Program.
This whistleblower program, created in 2022, allows for whistleblower awards of up to $5 million for reporting information that leads to the seizure or forfeiture of assets associated with foreign government corruption.
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The Department of Justice Whistleblower Rewards Program.
In 2024, DOJ announced a Corporate Whistleblower Awards Pilot Program for cases involving criminal financial fraud (including bribery and public corruption) and healthcare fraud that is not covered by existing whistleblower programs. To be eligible for a discretionary award, individuals must provide non-public information that leads to a criminal or civil forfeiture exceeding $1 million.
Regardless of the avenue of recovery, the general aim of these programs is the same: to enable and incentivize individuals to report corporate misconduct, fraud on our financial systems, and other violations of federal law. Unlike a False Claims Act qui tam suit, whistleblowers who expose misconduct under these programs do not actively litigate the cases, but they may nevertheless be entitled to a reward based on the amount the government recovers and the quality of the information provided by the whistleblower.
Often there are multiple ways to seek justice in economic fraud cases. Contact us to help figure out your best path forward.
Types of Financial Frauds
Fraudsters may be creative, but whistleblowers are courageous. Any time someone is seeking to unlawfully benefit themselves or someone else at the expense of others, whistleblowers can make a difference.
- Market Manipulation
- Offering Fraud
- Corporate Disclosures and Financial Misstatements
- Insider Trading
- Duties Owed to Customers and Markets
- Cryptocurrency
- Foreign Corrupt Practices Act
- Tax Fraud and Violations
- Money Laundering and Violations of the Bank Secrecy Act
- Sanctions Violations
Protections for Financial Whistleblowers
Whistleblowers reporting financial and investment frauds often take significant risks in coming forward. While the details of each reward program vary, most programs offer a range of protections for whistleblowers. In order to best understand your particular circumstances, you should speak to an experienced whistleblower lawyer.
- Confidentiality and anonymity. Submissions by whistleblowers to agency whistleblower programs are not public, and in most cases can be made anonymously. Even with these legal protections, however, you may be concerned about a company guessing that you made a disclosure, or about your identity becoming public if the matter proceeds. If you believe you have a case and are concerned about your identity becoming known, we can advise you about options to protect your identity.
- Retaliation. Many whistleblower laws provide anti-retaliation provisions to prevent and punish certain employment actions or other adverse actions taken against whistleblowers. Generally, these provisions are intended to protect whistleblowers from being fired or demoted or in any way discriminated against in the terms or conditions of their employment in retaliation for bringing a whistleblower claim.
- Whistleblowers in compliance roles. Whistleblowers who acquired the information they have because they are attorneys, accountants, auditors, or compliance personnel, face some additional rules as potential whistleblowers, including in some cases an obligation to report internally. If you had such a role, we will discuss with you the information you have to report, whether you may properly disclose it, and any obligations you may have to first report that information through other processes.
- Whistleblowers who were involved in the wrongful conduct. Individuals who had some role in the underlying fraud, including employees tasked with some part of that activity, are often in the best position to provide information to the government. While a whistleblower may receive a reduced reward if his or her participation in the fraud was substantial, you should not assume that your participation prevents you from getting an award.
If you believe you have evidence of financial fraud, investment fraud, or other corporate misconduct, contact us today.