Our financial institutions can be hotbeds for corporate fraud and wrongdoing, and they threaten to cripple our nation’s economy, and that’s exactly what happened in the recession of 2008.
Now, the silver lining of that catastrophe prompted congress to pass some of the most revolutionary acts in financial regulations since the great depression. Included in those laws are some of the most robust whistleblower protections that our nation has literally ever seen.
What are WHISTLEBLOWER’S Rights?
Congress has recognized that private citizens can function as the “canaries in the coal mine”. The government’s whistleblower’s rights incentivize and protect people for coming forward and blowing the whistle about this sort of corporate fraud or conduct.
Protections for Financial Whistleblowers
There are two resources that protect financial whistleblowers, The Sarbanes-Oxley Act and the Dodd-Frank Act. These acts protect financial whistleblowers who come forward with specific information about security law violations or corporate fraud.
People need to come forward with that information and make a complaint to an external agency like the SEC or according to most courts and the relevant regulations, internal complaints to superiors or internal departments like the human resources department or compliance department.
The whistleblower doesn’t actually have to prove there is a violation of the securities law. He only has to have a good faith, a reasonable belief that fraud has occurred.
For example, people that blow the whistle about inaccurate or misleading statements and a company’s financial statements or SEC filings would be protected by both the Dodd-Frank Act and the Sarbanes-Oxley Act. Similarly, any sort of reports of insider trading would likewise be protected under the Dodd-Frank Act.
The law provides some solid protections for people that do blow the whistle on corporate fraud.
Whistleblowers can file a charge with the United States Department of Labor or file a lawsuit directly in Federal Court if or when retaliation does occur.
Incentives for Whistleblowers Providing Tips to the SEC
The second component of the revolutionary changes that congress made with The Dodd-Frank Act, is the creation of the SEC’s Office of the Whistleblower. This program helps incentivize people that work at these publicly traded companies or banks, to provide tips to the SEC regarding any sort of SEC illegal violation or corporate fraud.
If that tip constitutes original information that the SEC didn’t already have or wasn’t already published and reported on, but if it’s original information and it results in the SEC recovering in excess of $1,000,000 then the tipster can recover between 10 and 30 percent of the SEC’s recovery. The SEC’s recoveries, every year, are getting larger and larger so there’s a huge incentive at this point for tipsters to come forward and submit tips to the SEC.
A Whistleblower can tip anonymously through an attorney. In other words, the attorney can be the intermediary with the SEC not needing to know who the tipster was. There’s been a huge spike in the number of tips that the SEC has received.
Last fiscal year, in 2014, they received 3600 tips. That is over a 20 percent increase compared to what they received in the previous two years. The SEC gave its largest award in the fiscal year 2014; a $30,000,000 award to a tipster. That shows that the law is working as it has been intended and we’re seeing some very good results when it comes to whistleblowers bringing retaliation lawsuits. The SEC and the Office of the Whistleblower Program are seeing increasing recoveries from tipsters.
At Van Kampen Law, we feel like it’s our patriotic duty to stand behind whistleblowers who are courageous enough to come forward. They are doing a service to our country to prevent this sort of catastrophe from happening in the future and they deserve the very best legal representation.
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