Do I need a Whistleblower attorney?

Under certain circumstances, the IRS and SEC/CFTC whistleblower programs allow whistleblowers to proceed without an attorney. However, beacuse there are important considerations when deciding how to proceed, it is advisable to contact an experienced whistleblower attorney.

SEC/CFTC Whistleblower Statute

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21, 2010 and contained provisions establishing whistleblower reward programs for both the SEC and the CFTC.

Whistleblower Provisions

Sections 922 and 748 of the Dodd-Frank Act amended the Securities Exchange Act of 1934 and the Commodity Exchange Act, respectively, by adding whistleblower provisions – enhancing incentives and protections for individuals who voluntarily provide the SEC or CFTC with original information about violations of the Securities Exchange Act or Commodity Exchange Act. If the information provided leads to a successful SEC or CFTC enforcement action, resulting in monetary sanctions exceeding $1 million, the whistleblower may be eligible for an award.

Monetary Awards

Should the information provided by an eligible whistleblower result in monetary sanctions, the SEC or CFTC will issue an award determination ranging from 10-30% of the amount recovered. Factors affecting the value of the whistleblower reward include:

  • The significance of the information provided by the whistleblower
  • The degree of assistance provided by the whistleblower and the whistleblower’s counsel
  • The programmatic interest of the SEC in deterring violations of the securities law
  • The extent to which the whistleblower cooperated with the internal compliance department of his or her employer

However, certain whistleblowers are not entitled to receive a reward. These include:

  • Officers or employees of certain government or self-regulatory organizations or those who were officers or employees at the time the information was learned
  • Whistleblowers who are convicted of a criminal violation related to the action for which they supplied the information
  • Whistleblowers who gained the information through performance of an audit required under the securities laws

Anti-Retaliation Provisions

The whistleblower provisions of the Dodd-Frank Act state that employers may not fire, demote, suspend, threaten, harass, or discriminate against a whistleblower because of any lawful act done by the whistleblower. If such retaliation occurs, the whistleblower may sue for reinstatement, back pay, and any other damages that were incurred.

Confidentiality Provisions

The Dodd-Frank Act permits for whistleblowers to report fraud anonymously, provided that they have secured legal representation. In certain instances, the whistleblower’s identity may not be revealed to the SEC or the CFTC until it is time to pay the whistleblower award. No other federal whistleblower program, including the IRS Whistleblower Program, and the qui tam provisions of the False Claims Act, safeguard the whistleblower’s confidentially this strongly.

Click here to read the statute.

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