SEC and CFTC whistleblower programs provide substantial rewards for Whistleblowers

Under the new Financial Reform Act, Dodd-Frank Wall Street Reform and Consumer Protection Act, Whistleblowers who report securities law violations are entitled to a reward if the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) or any other government entity recovers funds as a result of the whistleblower’s information. These remedies can be uses by whistleblowers to obtain rewards for their information and cooperation when a corporation commits a fraud and either obtains income that it would not otherwise be entitled or creates legal exposures for shareholders if corporate fraud or other corporate irregularities are uncovered. The failure to report these areas of corporate wrongs on their SEC filings could be held as a violation of the new Act and entitle the whistleblower who properly files his/her claim to substantial rewards.

Congress created whistleblower programs for both the SEC and the CFTC as part of the new financial reform law, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new SEC whistleblower program is much broader than an existing SEC whistleblower program, which just covers insider-training violations and may even be broader then the False Claims Act which requires receipt or retention of government funds to make the fraud allegations actionable.. Now whistleblowers who report securities law violations – from insider trading to money laundering to violations of the Foreign Corrupt Practices Act — will receive a reward if the SEC and any other government authorities recover more than $1 million based on that information.

Regulations have yet to be written for the new SEC and CFTC whistleblower programs. Begelman & Orlow, P. C. will be working closely with these agencies in making suggestions and providing opinions based on our experience with other whistleblower laws.

• Whistleblower rewards: 10 percent to 30 percent of the monies the SEC, CFTC and other prosecuting authorities collect based on the whistleblower’s information if more than $1 million is collected. We have listed below the factors will be considered to determine the whistleblower’s reward:
  • The significance of the information provided.
  • The assistance provided by the whistleblower and the whistleblower’s attorney.
  • The “programmatic interest” of the SEC “in deterring violations of the securities law.”

• Protection from Retaliation: The law specifically states that employers may not fire, demote, suspend, threaten, harass, or discriminate against a whistleblower. Whistleblowers who suffer from employment retaliation may sue for reinstatement, back pay and any other damages that occurred. State laws may also offer enhanced protections in this area for whistleblowers. As an example the New Jersey Consciences Employee Protection Act ( CEPA ) and in Pennsylvania, the Pennsylvania Whistleblower Protection Act provide other safeguards against retaliation against whistleblowers.

• Confidentiality: Whistleblowers may report fraud anonymously, as long as they have retained a lawyer to represent them. In some cases, their identities may remain unknown even to the SEC and the CFTC until the time comes for the payment of a reward. This is the strongest confidentially provision available out of any of the federal whistleblower programs, including “qui tam” cases under the False Claims Act and the Internal Revenue Service (IRS) whistleblower program.

Begelman & Orlow, P. C. is a *National Law Firm located in New Jersey and Pennsylvania. We have handled some of the nation’s leading cases under the Conscientious Employee Protection Act, the IRS Whistleblower Law and various State Whistleblower Anti-Retaliation Laws, such as the New Jersey Conscientious Employee Protection Act and the Pennsylvania Whistleblower Protection Act. We has filed, prosecuted and won large scale economic fraud whistleblower claims on behalf of the United States government and all of the States who have enacted False Claims Acts. The extension of Whistleblower Rewards in the area of Corporate Fraud, Financial Fraud and SEC Fraud has allowed Begelman & Orlow, P. C. to creatively and aggressively protect our whistleblower clients and obtain for them large financial recoveries and rewards.

If you have information about Corporate Fraud, SEC violations or cheating the United States or any State government *nationwide contact us for a free and confidential consultation.