Under the Securities and Exchange Commission's whistleblower program, employees who provide valuable information about securities fraud can receive sizable award payouts. Generally, though, if a compliance staff member or a high-level employee -- an executive, for instance -- reports a securities violation after hearing about it through another employee or through the company's compliance processes, then the staffer or executive is ineligible to receive an award from the SEC.
Dozens of federal and state laws offer protections to whistleblowers in a variety of industries. The False Claims Act, the Dodd-Frank Act and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) are just a few of those laws that allow for whistleblowers to receive a significant portion of any money recovered by the Department of Justice through settlement or judgment.
A qui tam lawsuit filed against Wells Fargo by two whistleblowers has been unsealed. The suit claims that Wachovia, which was bought by Wells Fargo in 2008, defrauded the federal government by accepting billions from federal programs while engaging in and concealing fraudulent banking practices, including falsifying certifications of the bank's financial statements. Wells Fargo is accused of not being upfront about the fraud inherited from Wachovia.
Under the qui tam provisions in the federal False Claims Act (FCA), employees, corporations, and private or public interest organizations may sue a company that defrauds the federal government. The legal action is brought on behalf of the government and the whistleblower, and an individual who brings a qui tam claim may stand to receive a sizable reward.
Four years ago, when the Dodd-Frank Act was signed into law, a program was started to protect whistleblowers from retaliation if they report securities violations. Whistleblowers can also receive monetary awards for providing information to the Securities and Exchange Commission. However, a recent ruling by a federal appeals court draws into question whether tipsters from overseas are afforded the same protections afforded to whistleblowers in the U.S.