Dodd Frank Program: SEC favors rewarding whistleblowers
In November 2010, the U.S. Securities Exchange Commission (SEC) proposed implementing section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act's whistleblower program. The new section would permit the SEC to reward whistleblowers for coming forward with information involving any administrative or judicial action resulting in sanctions greater than $1 million. The final rules implementing section 922 are expected to be released in April 2011.
Under the new whistleblower program, whistleblowers would:
- Receive monetary awards of 10 to 30 percent of the amount recovered by the SEC based on the information provided by the whistleblower
- Be permitted to remain anonymous when represented by counsel
- Not be required to report allegations first through a corporate compliance program
- Receive protection from retaliation by employers
Some believe that business interests are trying to reduce the effectiveness of SEC regulations by criticizing the program for encouraging whistleblowers to come forward through offers of substantial monetary awards for information that leads to meritorious cases, which some corporate representatives have referred to as bounties for "gold-digging."
Motley Rice member and whistleblower attorney Mark Labaton comments in California Lawyer magazine that the SEC's proposed regulations are fair and balanced. "There's lots of pressure not to come forward," he says. "It's generally tough, you could lose your job and you're often blackballed. The motivations of people are often complex. Of course making money can be a factor. But remember, no whistleblower under this program is going to benefit unless the SEC can successfully build a case using their information."
Read the entire California Lawyer article on Dodd-Frank Wall Street Reform.
Read more about qui tam cases and whistleblower protection and how Motley Rice whistleblower lawyers are fighting on behalf of individuals and businesses suffering as a result of corporate fraud.