Man committing ponzi scheme on his phone.

Ponzi Schemes and the SEC Whistleblower Program

A Ponzi scheme is a form of fraud in which investors in a fake firm are paid with the money from other investors. The investors in Ponzi schemes are led to believe that the money they receive is a result of the firm’s investment acumen, when it is actually paid using later investors’ initial investments. Although Ponzi schemes eventually unravel when they are no longer able to raise funds to make payments to investors, they can operate for years undetected. Ponzi schemes are illegal, and those who provide information to the Securities and Exchange Commission about these schemes may be entitled to significant financial compensation. 

Ponzi Scheme Red Flags

Ponzi schemes share several common characteristics. Ponzi scheme red flags include:

  • Consistently high investment returns regardless of market conditions
  • Little to no risk 
  • Unregistered investments
  • Complex or secretive investment strategies 
  • Lack of documentation 
  • Trouble receiving payments

SEC Whistleblower Program

Under the SEC Whistleblower Program, individuals who provide information to the SEC regarding certain types of financial fraud, including Ponzi schemes, are entitled to monetary awards. Specifically, if the information provided by a whistleblower results in a successful enforcement action with total monetary sanctions in excess of $1 million dollars, the whistleblower may be entitled to an award of up to 30 percent of the total sanctions collected by the SEC. In addition, the SEC Whistleblower Program protects the confidentiality of whistleblowers and doesn’t disclose any information that could directly or indirectly reveal a whistleblower’s identity.  

SEC Whistleblower Awards

The SEC Whistleblower Program has issued nearly $500 million in awards to whistleblowers since 2012. The three largest SEC whistleblower awards to date were $37 million, $39 million, and $50 million.

Reporting a Ponzi Scheme to the SEC

In order to report a Ponzi scheme to the SEC and qualify for a monetary award, you should first contact an SEC whistleblower attorney for assistance. The SEC Whistleblower Program has specific reporting requirements, and an SEC whistleblower attorney will ensure that your report is made in accordance with SEC rules. In addition, an SEC whistleblower attorney will ensure that your information is reported in a manner that maintains your confidentiality and gives you the best chance at a successful result. 

Contact Our SEC Whistleblower Attorney Today 

If you have information concerning a Ponzi scheme or other type of financial fraud, you may be entitled to a financial award. However, in order to ensure that you do everything correctly, you need an experienced SEC whistleblower attorney in your corner. At Jeff Newman Law, we understand how difficult it is to make the decision to become a whistleblower. Therefore, when we accept you as a client, we’ll do everything we can to ensure that you obtain the maximum award permitted by law. Please contact us today for a consultation.