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Reporting the Violation of the Securities Law

07th January 2011
By Jorjina in Law
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The US Securities and Exchange Commission (SEC) operate a Center for Complaints. It is the task of this center to look into the tips and complaints from individuals or organizations regarding misconduct as well as unfair and illegal practices in the securities industry. However, before you contact them, here is a quick look at the whistleblower program run by the center.

Initially, there was no reward for the whistleblower. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act signed on July 21, 2010, changed the way things were before. If you report a violation of the federal securities law by another entity and your complaint serves as the basis of enforcement of administrative or judicial action, you may be eligible for the reward.

Moreover, the Act also provides the whistleblower protection from any sort of retaliatory action. This is applicable when the entity against whom you brought the charge is your employer. Therefore, you need not fear actions like firing or demotion or anything like that from your employer for reporting any violation of the laws. It is better to get in touch with an attorney to know the implications of your actions.

Only proper evaluation of the complaint, or tip, makes it possible to launch an investigation. If you are planning to file a complaint or provide a tip, it is better to give as much of the details as you are aware of easing the process. Obviously, there is no constraint regarding the amount of information you provide. However, it would be better if you could mention the following details:

  1. Name and contact details of the entities you mention (including address, telephone number, email address, and website)
  2. The specific details of the time, place and procedure (if you encountered a defraud or a problem while dealing with a security or securities personnel)
  3. Your name and contact details (address, telephone number and email address)

Many are unaware of what happens after the filing of a complaint, or the tip. The first step for the SEC is to evaluate the seriousness of the matter. This helps determine where the case passes on to next.

If it is a complaint regarding a certain securities personnel or your financial matters, the Office of Investor Education and Advocacy handles it. However, if it concerns a SEC whistleblower, i.e. complaints regarding violation of law, it is the responsibility of the Division of Enforcement. In most cases, the Commission cannot assert or negate the existence of an investigation because of confidentiality reasons.

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