Who Can Be a Whistleblower?

Most people with original, non-public information about fraud or illegal misconduct may qualify as whistleblowers, even if they aren’t direct witnesses. Reports can come from anyone, anywhere, as long as the information relates to U.S. markets or government funds. Not all misconduct is covered, so it’s a good idea to call an attorney.

What Is It Like to Be a Whistleblower?

Blowing the whistle can be rewarding but challenging. The process often takes years, may impact your personal and professional life, and requires patience and courage, but many whistleblowers find it deeply worthwhile.

What Kinds of Wrongful Conduct Are Covered by Whistleblower Reward Laws?

Major whistleblower reward programs cover a wide range of unlawful activity. These include government fraud under the False Claims Act, securities violations (SEC), commodity violations (CFTC), tax fraud (IRS), money-laundering and sanctions violations (FinCEN), and vehicle safety violations (NHTSA). Other programs may also apply in specific circumstances.

When Is a Whistleblower Entitled to a Financial Reward?

Under most whistleblower programs, you may be entitled to a reward if you voluntarily provide original information that leads to a successful enforcement action. Rewards are typically a percentage of the sanctions and usually require submitting an application.

Insider Trading and
Front Running

PRACTICE AREAS

Practice Areas

OUR PRACTICE AREAS

Expose Insider Trading and Front Running with Experienced Securities Fraud Attorneys

Name: Whistleblower Partners LLP
Price range: $$

Front-running and insider trading are among the most fundamental violations of investor trust. Both involve the exploitation of information advantages that ordinary investors do not have — and both undermine the fairness and integrity that the financial markets depend on. Whistleblowers are often essential to bringing them to light.

Front-running and insider trading both involve exploiting nonpublic information for personal gain at the expense of other investors.
These schemes occur in both the securities and commodities markets, and Whistleblowers can report these schemes to the SEC and CFTC Whistleblower Program and may be eligible for significant financial rewards.
Anyone with knowledge of front-running or insider trading—including employees, investors, brokers, or other industry participants—may qualify as a whistleblower.

If you have witnessed or discovered front-running or insider trading, you do not have to navigate reporting on your own. Reach out to our experienced attorneys at Whistleblower Partners LLP for comprehensive guidance on how to blow the whistle on these illegal practices.

Common Front-Running and Insider Trading Schemes

While front-running and insider trading are distinct violations, they share a common thread: both involve trading on information that other market participants do not have access to, in breach of legal duties owed to clients, employers, or the market as a whole.

Front-Running

Front-running occurs when traders exploit nonpublic information about pending orders for personal gain. For example, a broker who knows a large client order will move the market may trade in advance of that order to profit from the anticipated price movement. Front-running is a breach of fiduciary duty and a violation of securities and commodities laws and can cause significant harm to clients and other market participants.

Front-running can take a number of forms. In the most straightforward cases, a broker or trader at a financial institution trades ahead of a large client order, knowing that the execution of the order will move prices in a predictable direction. In other cases, front-running may involve employees at asset managers, investment banks, or trading firms who have access to information about other anticipated market-moving activity and exploit that knowledge before it becomes public. Regardless of the specific form it takes, front-running is an active enforcement priority for the SEC and, where futures or commodities markets are involved, the CFTC.

Insider Trading

Illegal insider trading occurs when a person breaches a fiduciary duty or position of trust and confidence to facilitate the buying or selling of a security based on material, nonpublic information about the security or its issuer. Classic examples include:

A company executive who sells off stock because they know the company has had a major setback before it is publicly announced — or, on the flip side, buys stock ahead of a positive development.
A stockholder who owns more than 10% of a company’s shares learns that the company is about to announce an important new product and tips off a friend, who then trades on that information. This is sometimes called “tipper/tippee” insider trading — and both the person who gives the tip and the person who receives it can face liability.
An accountant who does work for a company learns that the company is about to report a significant dip in quarterly earnings and sells off stock in that company before the earnings numbers become public. Even though the accountant is not an employee of the company whose stock they sell, they are still in a position of trust and confidence and possess inside information.

Although insider trading often involves a single rogue individual, it can also involve complex rings of bad actors perpetuating a scheme over years or even decades. Sophisticated insider trading groups often seek to recruit well-positioned tipsters at law firms, banks, or international conglomerates to create a pipeline of material, nonpublic information on which they can reap continual illicit profits.

It is important to note that it is not illegal every time someone who is an insider at a company trades that company’s stock. If they are not acting on material nonpublic information, and if they comply with SEC reporting requirements, the transaction may be legal. The rules about what kinds of insider trading are illegal come from Sections 10(b) and 16(b) of the Securities Exchange Act of 1934. If you have information about insider trading and are unsure whether it is illegal, it is a good idea to reach out to an attorney experienced in securities and commodities fraud matters. Whistleblower Partners would be happy to hear from you.

What Role Do Whistleblowers Play?

Whistleblowers play a vital role in helping the SEC uncover front-running and insider trading through tips to the SEC Whistleblower Program. A whistleblower might be a company insider who knows that colleagues are making illegal trades, an employee at a brokerage who knows that brokers are trading ahead of client orders or on material nonpublic information, or even someone who learns that friends or acquaintances are engaging in insider trading. Because these schemes can be difficult to detect from the outside, regulators frequently depend on insiders to bring them to light.

How Can You Blow the Whistle?

You can blow the whistle on front-running or insider trading by making a tip to the SEC Whistleblower Program. Whistleblower Partners has extensive experience assisting clients with SEC whistleblower submissions. We understand the complicated and constantly evolving legal landscape governing these areas and are well-positioned to guide you through the whistleblower process. If you would like more information or would like to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.

Four adults, two men and two women, pose together in business casual attire in front of a red brick wall outdoors, reminiscent of a dedicated New York Medicare whistleblower team.

Four people, two men and two women, pose together outdoors in front of a brick wall, all wearing business casual attire and looking at the camera. The group exudes professionalism, resembling a dedicated team of San Jose IRS whistleblower lawyers ready to advocate for clients with integrity and expertise.

FREQUENTLY ASKED QUESTIONS

Who Can Be a Whistleblower?
Most people with original, non-public information about fraud or illegal misconduct may qualify as whistleblowers, even if they aren’t direct witnesses. Reports can come from anyone, anywhere, as long as the information relates to U.S. markets or government funds. Not all misconduct is covered, so it’s a good idea to call an attorney.
What Is It Like to Be a Whistleblower?
Blowing the whistle can be rewarding but challenging. The process often takes years, may impact your personal and professional life, and requires patience and courage, but many whistleblowers find it deeply worthwhile.
What Kinds of Wrongful Conduct Are Covered by Whistleblower Reward Laws?
Major whistleblower reward programs cover a wide range of unlawful activity. These include government fraud under the False Claims Act, securities violations (SEC), commodity violations (CFTC), tax fraud (IRS), money-laundering and sanctions violations (FinCEN), and vehicle safety violations (NHTSA). Other programs may also apply in specific circumstances.
When Is a Whistleblower Entitled to a Financial Reward?
Under most whistleblower programs, you may be entitled to a reward if you voluntarily provide original information that leads to a successful enforcement action. Rewards are typically a percentage of the sanctions and usually require submitting an application.