Understanding Whistleblower Law

The United States Securities and Exchange Commission offers a reward for whistleblowers. The program which became law in July of 2010 when President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. This law in part established a reward system that allows whistleblowers to be awarded from 10 to 30 percent of any monetary sanctions imposed by the SEC if the amount collected in more the $1 million.

This program was designed the bounty program the SEC had in place for than 20 years. The bounty program, which was widely considered to be poorly designed, received very few applications and made a low number of payouts for the tips on insider trading it was designed to attract.

The Dodd-Frank Wall Street Reform and Consumer Protection Act changed that with implementation of the SEC Office of the Whistleblower and the whistleblowers award system.

The whistleblower process is divided into 3 parts. The first phase is called intake begins when the whistleblower submits a complaint to the SEC. At that point the SEC staff will review the whistleblowers information to determine if the complaint has validity and should be further investigated. If the complaint is thought to have merit, it will be investigated by the SEC Enforcement Division.

The second phase involves further investigation of the complaint. The cooperation of the whistleblower is very important in this phase. The whistleblower must provide useful information and may need to aid the enforcement group as a subject matter expert.

The third phase is when the whistleblower can claim their reward. The whistleblower can claim the award if information they provided leads to sanctions of the $1 million threshold. The whistleblower only has 90 days file the claim with the Office of the Whistleblower once the office posts the notice on its webpage.

Since the program was created Their have been several large payouts have been made. The largest award was for $30 million in September of of 2014. Other large awards include $3 million in July of 2015 and $14 million in October 2013.

Recently issued its second largest award to date, more that $17 million was awarded to former corporate employee who provided information that helped the agency with its investigation. This whistleblower was represented by Labaton Suchrow LLP, the nations first practice that is focused on whistleblowers with the SEC. The lawyers has strong history of representing whistleblowers and protecting their rights, including against employer retaliation.

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