Individuals who uncover securities or commodities market fraud have a new avenue to disclose these practices. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), passed in July 2010, includes provisions to incentivize and protect whistleblowers who report fraud in the securities or commodities markets.
Under the new law, whistleblowers will receive awards of 10 to 30 percent of any amounts recovered as a result of “original information” they provide to the Securities Exchange Commission (“SEC”), as long as the government’s total recovery is more than $1 million. The law establishes specific factors for the SEC to consider in setting award amounts, including the significance of the whistleblower’s information and the extent to which the whistleblower assisted the government’s actions.
The new law also includes several provisions designed to protect SEC whistleblowers. For example, Dodd-Frank protects whistleblowers from employer retaliation, offering reinstatement and back pay, among other things. Employees also cannot waive their right to pursue a whistleblower action, even if they previously signed a general release with their employer. And the SEC must keep whistleblowers’ identity confidential “unless and until required to be disclosed…in connection with a public proceeding.”
Many financial fraud cases may also fall within the reach of the False Claims Act’s whistleblower provisions, which give even greater rights to private citizen-whistleblowers than the new SEC program. If you think you might have a financial fraud case, fill out our Questionnaire so that we can discuss your options.