What Is an Inadequate Corporate Disclosure Under SEC Guidelines?

Spread the love

When an investor is examining the details of company prior to making the decision to invest, they need to be able to review important relevant information about the health of the corporation. If an investor fails to take these precautions, and ultimately loses out on their investment, the blame falls on them.

However, more often than you might think, corporations will withhold, exaggerate or leave out material details about their company that an investor should have had the opportunity to review. This action is known as an inadequate corporate disclosure.

These are violations of the United States Securities and Exchange Commission (SEC) and are subject to significant penalties if a corporation is found to have engaged in such fraudulent activity. Read on to learn more about commonly seen inadequate corporate disclosures and what you need to know about becoming a whistleblower.

Examples of Inadequate Corporate Disclosures

There are seemingly endless ways that a corporation can fail to disclose pertinent information to potential investors, some more frequently seen than others. The inadequate corporate disclosures that occur most often include:

  • Failure to disclose risky business strategies
  • Failure to disclose conflicts of interest
  • Falsifying financial documents
  • Covering up personal misconduct within the company

Each of these puts investors at an increased risk. Investors need to know that the corporations they are investing in are financially sound, providing necessary and accurate financial records, that their investment isn’t a high-risk, and that the corporate leaders are going to prioritize their investors needs before their personal ones. These factors significantly impact a potential investor’s decision to invest with a company or take their investment elsewhere.

What You Need to Know About Becoming a Whistleblower

You might be refraining from providing the information you have to the SEC because you are afraid of being retaliated against. Although this is a risk, both the Dodd-Frank Act and Sarbanes-Oxley Act contain provisions that explicitly state that employers are not legally allowed to retaliate against employees they suspect of whistleblowing.

If you are harassed, demoted, terminated, have your professional reputation tarnished or are made to work in a hostile environment, you can bring a claim against your employer and recover double back pay, reinstatement into your former position and a number of other losses.

Also, the SEC will take matters into their own hands and impose sanctions that could include fines and other penalties. You will also have the option of remaining anonymous when you report your tip as long as you are being represented by an attorney. Your lawyer will report your tip on your behalf and keep your identity protected throughout the SEC’s investigation.

The only time your identity will need to become known is if you become eligible for a whistleblower award. At that point, the SEC will need to know who you are so they can reward you for the risk you took. The SEC does not make the identities of their whistleblowers public, though they made need to notify certain government agencies of your identity in specific circumstances.

Reach Out to an Experienced SEC Whistleblower Lawyer

As can be seen, the importance of blowing the whistle on inadequate corporate disclosures is paramount to the success of businesses and investors.

If you’re ready to move forward in reporting your tip to the SEC and you want to make sure you are protected from retaliation, get in touch with a highly trained SEC whistleblower lawyer. Act now, before another whistleblower beats you to the punch.