The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act provides new and important protections and incentives for whistleblowers to help the Securities and Exchange Commission (“SEC”) root out fraud. This new legislation provides that the SEC must pay whistleblowers 10% to 30% of SEC sanctions in excess of $1 million. To receive payment, the whistleblower must voluntarily provide the SEC with information that was unknown to it, and that was obtained from the whistleblower’s independent knowledge. The SEC must also pay an award if the information leads to enforcement actions by other governmental organizations, such as other federal agencies, the U.S. Department of Justice, a self-regulatory organization, or a state attorney general. These provisions apply even where the whistleblower is or may have been a securities law violator himself or herself, unless the whistleblower is criminally convicted. Whistleblowers may be eligible for cooperation agreements that may limit their civil liability. The Act’s whistleblower provisions are now effective, but the SEC has until May 2011 to create rules to assist in carrying out these provisions.
The Act also provides protection would-be whistleblowers by creating a federal claim against employer retaliation. The Act also allows whistleblowers to present the information and obtain incentive payments anonymously, by acting through counsel, up until the time the incentive payment is sought.
SFMS’ long record of assisting whistleblowers, and its extensive practice prosecuting securities class actions, combine to make SFMS uniquely suited to represent SEC whistleblowers. SFMS’ securities lawyers and investigators, and its false claims team, will work together to put together and present SEC whistleblower cases. For more information on the Firm and its securities and false claims teams, please contact Scott R. Shepherd at 877-891-9880 or