Whistleblower Rights Under Dodd Frank

We live and do business in a complex regulatory landscape with the number of laws and regulations affecting specific types of businesses increasing on a daily basis. This is especially true in the banking and financial sectors where recent high-profile abuses have caused regulators to crack down. While the government allocates significant resources and labor to the enforcement of these regulations, the government simply cannot be everywhere at once. That is why, to an increasing extent, the federal government relies upon conscientious whistleblowers to bring to light violations and abuses that would otherwise be hidden from regulatory scrutiny. People who commit to reporting illegal conduct often put themselves at professional and financial risk. Fortunately, federal law provides protection for whistleblowers as well as potential compensation for their services. At the law firm of Joseph & Kirschenbaum LLP, our New York whistleblower attorneys are well versed in these laws and programs, including the Dodd-Frank Wall Street Reform and Consumer Protection Act. We can help individuals in the financial industry who are concerned about illegal conduct disclose their information to the proper authorities in a way that ensures their protection, safeguards their rights and, in some cases, earns the whistleblowers a share of the money recovered.

Dodd-Frank became law in the wake of the 2008 financial crash with the goal of encouraging transparency and discouraging regulatory violations within the financial industry. The Act accomplishes this in two distinct ways:

• The Act provides a private right of action by which whistleblowers can sue employers who retaliate against them for reporting misconduct to the Securities and Exchange Commission (SEC).

• The Act authorizes the payment of a bounty of up to 30 percent to any whistleblower who provides original information that leads to a successful assessment in excess of $1 million in administrative or judicial penalties.

Section 922 of the Dodd-Frank Act provides a compensation program for whistleblowers and the awards payable under this program can be quite substantial. However, whistleblowers must be careful in what information they provide and to whom they provide it in order to ensure they qualify for compensation:

• Whistleblowers must provide “original information.” This means that the information is derived from the whistleblower's independent knowledge, is not already known to the SEC and is not derived from allegations already made by someone else in a judicial or administrative proceeding.

• The information must be voluntarily provided to the Securities and Exchange Commission.

• The information must lead to the assessment of more than $1 million in monetary sanctions against the offender.

• The whistleblower or their lawyer must file a claim with the SEC within 90 days of the administrative or judicial action taken by their attorney.

Whistleblowers who qualify can expect to receive between 10 and 30 percent of the sanctions actually collected subject to the SEC's discretion. The SEC's decision may be appealed to the United States Court of Appeals.

Financial sector professionals who report unlawful conduct to the SEC can experience professional and financial blowback. The Dodd-Frank bounty program can defray these costs and provide whistleblowers some sense of security. However, qualifying for payments under Dodd-Frank is not automatic and whistleblowers must be sure to follow proper procedures or risk forfeiting hundreds of thousands or millions of dollars. Our New York whistleblower attorneys at the law firm of Joseph & Kirschenbaum LLP understand Dodd-Frank and other whistleblower laws, as well as the stress and uncertainty whistleblowers feel, and are here to guide and act for you every step of the way. Contact our office today to arrange a confidential no-cost consultation. We are available at 212-688-5640. You can also contact us online. Se habla espanol.