4 Things That You Didn’t Know You Should Report To The Authorities

In the United States, the SEC is an independent arm of the US federal government which is designed to prevent financial disasters such as the Wall Street crash. They encourage the reporting of suspicious or malicious activity, mostly surrounding stock market manipulation. In this article, you will see details of what this system is, how it works, and a few examples of things you can – and should – report to the authorities. If you have concerns regarding any suspicious activity of this nature, read on to find out more.

 

The SEC Whistleblower Program

First, let’s get an understanding of what the SEC Whistleblower Program is. As detailed in great length by a specialist whistleblower lawyer over at the law firm https://frankowskifirm.com/practice-areas/sec-whistleblower/, the Whistleblower Program is designed to fiscally encourage people to come forward if they have any suspicion of malicious activity. Law firms are now assisting potential whistleblowers to share their information and get a fair financial reward for doing so. If you think you have any information regarding fraud or market manipulation, it is recommended to speak to a specialist lawyer immediately.

In effect, the program encourages people to come forward with information regarding market manipulation in return for financial rewards. The program is aimed at any employee of any company that may be trading suspiciously or be encouraging manipulative behavior in the stock market. The financial rewards can be great, with over $523 million being paid out to whistleblowers.

What About My Job?

Whistleblowing can be a scary prospect. If your boss was to find out you had leaked this information, you could expect severe punishment, especially if the information led to huge fines or criminal proceedings. However, the scheme is also designed to protect employees. If you provide information to the SEC under this program, your job will be protected. This means your employer cannot fire you for releasing said information. 

Things You Can Report

So, what kind of details is the SEC looking for? Well, as mentioned, basically anything that is a form of market manipulation. Let’s look at a few key examples of reportable behaviors and why you should come forward if you suspect any of them.

1. Ponzi Schemes

Ponzi schemes, much like pyramid schemes, are aimed at generating income for long-term investors. To do this, Ponzi schemes encourage lots of new investors into a certain market, therefore paying the gains to the older investors. The new investors are promised huge returns but the money is really traveling up the scheme to older investors. These schemes need to keep flooding the market with new investors to repay old investors. Eventually, new investment dries up, causing the schemes and potentially causing the whole market to crash.

2. Insider Trading

When purchasing stocks, you have to make a fair judgment on whether you think that stock will be successful, based solely on publicly available information. If you learn about company information that is not publicly available and you make purchases based on this private information, this becomes an illegal act. Sharing private information to inflate or crash stocks is part of the same problem. Insider trading has caused huge controversies and problems in the stock market over the years and is one of the top things the SEC tries to crack down on.

3. False Financial Statements

Falsifying financial statements is another kind of market manipulation. Usually, in doing this, a company is publishing information to suggest that they are doing better financially than they really are. This could encourage people to buy more of their stocks at an inflated price which, in turn, helps the company cover up its losses. This kind of manipulation can cause companies and their stock values to suddenly crash, which can have a huge effect on the wider market.

4. Bribery

Bribery, specifically of foreign officials or businesses to help list stocks on the US market, is heavily cracked down on by the SEC. Bribing foreign officials to gain contracts for US companies is one of the key areas. These foreign contracts, made through bribery, are used to underwrite huge levels of US stocks and bonds, making them illegal. Surprisingly, it is often huge corporations like Goldman Sachs who are caught making illegal international payments to help underwrite US stock. They were charged over $1bn in damages in 2020.

 

Any sign of any of these activities taking place should be a red flag. And, if you have evidence you should take it to a specialist lawyer for advice right away. You may well be in line for some huge financial reward if your information leads to a conviction.

Did you like what you just read?

Show your support for Local Journalism by helping us do more of it. It's a kind and simple gesture that will help us continue to bring stories like this to you.

Click to Donate

Northern Colorado LiveMarket

Unable to find marketplace offers.

Be the first to comment

Leave a Reply