In recent years, the SEC has had greater success policing wrongdoing due in large part to the implementation of its whistleblower program, which allows individuals to anonymously sound the alarm against corruption while benefiting from robust employment protections and monetary incentives.

But the whistleblowers’ crosshairs are not limited to Wall Street. Individuals are beginning to come forward in a new sphere of the business world, one with its own reputation of a problematic, win-at-all-cost culture: Silicon Valley.

While Google, Facebook, Apple and other large public tech companies are standard bearers within the U.S. economy, Silicon Valley is largely comprised of startups at various stages, as well as venture capital firms, many of which fall under the purview of the Securities and Exchange Commission. That includes nearly every unicorn — a private company valued at more than $1 billion — which has taken investments from mutual funds and retail investors, such as Uber, Dropbox, WeWork, Airbnb and other firms that have grown into household names.

Potential minefields

Silicon Valley firms can engage in the same violations as any other entity subject to federal securities regulation. For instance, violations involving corporate disclosures and financials may well be a hotbed of misconduct, an area which already represents a significant portion of whistleblower tips received by the SEC.

In the Silicon Valley universe, some are already raising concerns regarding the potential dangers of retirement money invested in private early-stage companies. Given the risk of harm to the public, law enforcement will be swift in bringing enforcement actions against bad actors playing fast and loose with Americans’ retirement savings.

Further, the SEC has specifically signaled that it is closely scrutinizing the way in which mutual funds calculate valuations of their holdings in these companies. Notably, in early 2017, a former employee of social networking company Snap filed a whistleblower lawsuit claiming the company lied about its user metrics ahead of its initial public offering in March. The case highlights the importance of user-metrics in valuing tech startups, particularly social media companies, and the huge incentives for bad actors to alter them in various disclosure and financial forms.

The SEC also has expressed concern regarding the propriety of a growing tech investment trend — blockchain startups, cryptocurrencies and initial coin offerings. There are currently more than 70 hedge funds alone focused on investing in cryptocurrencies and initial coin offerings (ICO), many of them backed by major venture capital funds. New companies in this field have raised more than $1.3 billion in 2017 alone.

Silicon Valley is on notice. Its culture of silence is poised to crumble.

Any entrepreneur with an idea for a blockchain-based technology can solicit capital via an ICO, with little to no immediate safeguards in place for investors. The SEC has taken note, pursuing clear-cut ICO fraud cases in which operations and potential returns were misrepresented or exaggerated. In addition to pursuing cases of fraud, the SEC has also strongly suggested it will treat ICOs as securities, subject to all applicable federal securities laws. To better police this rapidly evolving area, the SEC established the Cyber Unit, a specialized enforcement unit dedicated to targeting cyber-related misconduct.

An industry exposed

For decades, potential whistleblowers in Silicon Valley have been suppressed by a culture of silence, similar to the prevalent “omerta” culture at many Wall Street firms. Speaking out has, in the past, often resulted in retaliation and blacklisting by an entire industry. This is an especially significant risk given the many years it can take to acquire the required skills and develop a network within the relatively insular concentration of Silicon Valley.

The widespread use of non-disparagement clauses in employment agreements has further exacerbated this culture of silence and hindered potential whistleblower activity. Recently, several brave individuals have upended the status quo by revealing startling misconduct at Silicon Valley companies. While illustrative examples such as Susan Fowler’s blog post about Uber and Ellen Pao’s revelations regarding the venture capital industry have focused on gender discrimination and harassment, the courageous exposure of a culture of silence is the first step toward taking it down.

And it must be taken down. Those working in Silicon Valley occupy a unique position due to their expertise in a rapidly growing, highly complex and ever-evolving field. Similar to Wall Street, tech industry insiders have a heightened responsibility to speak out against misconduct because the general public may not fully grasp the funding structure of these new companies and their financial instruments.

The SEC whistleblower, the dark horse

The SEC Whistleblower Program, with its robust employment protections and the ability to report anonymously, challenges a corrupt status quo. And the program’s significant financial incentives — eligible whistleblowers can receive 10-30 percent of the monetary sanctions collected in an enforcement action where sanctions exceed $1 million — quell fears of speaking out.

That said, in the current information age, the program also recognizes that intelligence can come from a much wider range of sources than employee insiders. Nearly everyone is eligible. Successful actions have been brought by professors, analysts, reporters, industry competitors and other sophisticated observers who spotted irregularities and misleading information.

As the program has successfully stretched beyond Wall Street, Silicon Valley is on notice. Its culture of silence is poised to crumble as individuals come forward empowered by the protections and benefits of the SEC Whistleblower Program. Individual bad actors who have flouted the law are no longer free to operate with impunity. Now, somebody is always watching.