Our financial institutions can be hot beds for corporate fraud and wrong doing, 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. Congress has recognized that private citizens can function as the “canaries in the coal mine”; they want to 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 recourses that protect financial whistleblowers, The Sarbanes-Oxley Act and the Dodd-Frank Act. These acts protect people 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, reasonable belief that fraud has occurred. So 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 pretty robust 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 law suit directly in Federal Court if or when retaliation does occur.