The Dodd-Frank Act Whistleblower Provisions

In July 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was signed into law. This Act established important new provisions for whistleblowers who voluntarily provide original information to the SEC that leads to a covered judicial or administrative action such as a successful prosecution for securities law violations.

While SEC bounty programs and government qui tam claims have been in place for years, the new SEC whistleblower program, modeled after the False Claims Act, created significant incentives to report information on corporate fraud and bribery. A person who voluntarily provides original information about a securities law violation to the SEC, if its leads to a successful enforcement action, is entitled to collect 10 to 30 percent of the total penalties imposed by the agency or other governmental organizations.

The Dodd-Frank Act also strengthens the whistleblower protection provisions of the Sarbanes-Oxley Act and the False Claims Act, allowing a reward to a whistleblower who provides information to the Commodity Futures Trading Commission.

For a confidential, free consultation about a possible whistleblower claim, please contact Motley Rice lawyer Mark Labaton by email or call 310.500.3540.

Incentives for Whistleblowers Reporting to the SEC

The Dodd-Frank Act offers incentives and increased protection for whistleblowers in the SEC whistleblower program. The law authorizes the SEC to reward those who provide information concerning violations of the federal securities laws by companies that are required to report to the SEC.

Whistleblowers (sometimes called relators) providing original information about corporate wrongdoing can help stop that wrongdoing by filing a claim and may receive a substantial monetary award when the information they provide leads to a penalty in excess of $1 million.

The government will determine the extent of all awards based on the significance of the information given and other factors, including the assistance given by the whistleblower and the whistleblower’s lawyers.