The financial reform bill signed last week by President Obama not only strengthens whistleblower protections but provides a financial incentive to blow the whistle against fraud on Wall Street.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (.pdf), whistleblowers are directed to report fraud cases directly to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
For original information that results in more than $1 million in sanctions, the whistleblower can receive from 10 to 30 percent of the amount obtained by the SEC or CFTC. The award amount depends on how vital the information was in pursuing the case and the degree of assistance provided by the whistleblower. Awards will not be given to a whistleblower who was convicted of a crime related to the fraud he or she reported.
To be considered “original” information, the reporting must result from the knowledge or analysis of the whistleblower and not from media sources or from government publications, hearings, or investigations. The information must be unknown to the SEC or CFTC.
Under the law, whistleblowers, who suffer retaliation from their employers for providing information to the government, may sue in federal court. The law defines retaliation as discharge, demotion, suspension, harassment, or discrimination. Remedies include reinstatement, back pay, and court fees.
The Dodd-Frank law also amends whistleblower provisions in Sarbanes-Oxley. Under the new law, the statute of limitations under Sarbanes-Oxley is doubled from 90 days to 180 days. Also, Dodd-Frank states that those suing under Sarbanes-Oxley have a right to a jury trial rather than pursuing their claims through the Occupational Safety and Health Administration.
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