What Are the Dodd-Frank Whistleblower Laws?
The term Dodd Frank whistleblower has started to appear in the news but most Americans still don’t realize how the Dodd Frank whistleblower laws may help in the fight against frauds that impact every American. In the wake of the financial crisis of 2008, Congress passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act.” A key component of this new law is the creation of new whistleblower programs. The Dodd-Frank Act created new whistleblower programs at the Securities and Exchange Commission (SEC) and at the Commodities Futures Trading Commission (CFTC) that opened in 2011 when the new regulations enforcing the law took effect.
Congress created this new whistleblower law to encourage individuals to come forward to either the SEC or the CFTC with information about violations of the federal securities or commodities trading laws. The assistance provided by whistleblowers who know of violations of these federal laws is invaluable to the federal government in its ongoing effort to identify these frauds and help prevent new ones in the future. With the help of whistleblowers, the federal government can reduce the risk of harm to investors, assure confidence in the integrity of U.S. financial markets, and hold those engaging in fraud accountable for their violations.
Under the new whistleblower law, eligible whistleblowers are rewarded with between 10-30% of the monetary sanctions collected in actions brought against violators where the sanction is more than $1 million. How the percentage is decided depends on several factors. Further, like the False Claims Act, the new whistleblower law also prohibits retaliation by employers against employees who provide information about possible violations of the securities or commodities trading laws.
Significantly, the new whistleblower law does not involve filing a whistleblower lawsuit in a court as happens when a whistleblower uses the False Claims Act. Under the new whistleblower law, a whistleblower, with the assistance of a whistleblower lawyer, provides confidential information to the SEC or the CFTC whistleblower office (depending on the nature of the violations being alleged). Under the new whistleblower law, only the whistleblower and the whistleblower’s lawyer know that he/she is the person providing the information to the government. Even the federal agency investigating the allegations will not know initially who the whistleblower is. This added layer of protection for a whistleblower helps reduce the risks for a whistleblower who may be wary of coming forward with information about what an individual or company is doing for fear of retaliation.
The Dodd Frank whistleblower law is a powerful new tool in fighting fraud. It has already begun to show changes with hundreds of tips pouring into the agencies, and several penalties announced. The government, aided by whistleblowers and their whistleblower lawyers, will be better equipped to assure that individuals and corporations abide by the law in conducting their business. If you would like more information about the Dodd-Frank Whistleblower Program and how the law works, or if you have information about possible violations of the securities or commodities trading laws, contact the whistleblower lawyers at Keller Grover LLP who are prepared to help whistleblowers bring their Dodd-Frank whistleblower actions to the SEC or CFTC.