The Dodd-Frank Act was passed in July 2010, establishing the SEC Office of the Whistleblower in 2011. The program was designed by Congress to provide monetary incentives for anyone who has knowledge of fraudulent activities to step forward and report possible violations. The program protects individuals who report possible violations by prohibiting retaliation by employers against employees who provide information about those possible violations. Additionally, the Securities and Exchange Commission (SEC) is required by law to protect the confidentiality of whistleblowers and cannot disclose any information that might reveal their identity.
The program entitles eligible whistleblowers to an award between 10 percent and 30 percent of the monetary sanctions collected in actions by the SEC. Eligible whistleblowers are individuals who voluntarily provide original information of a possible violation. Original information means that the information comes from your own knowledge or analysis. The information should not already be known to the SEC either through public knowledge or from another individual. The violation could have occurred in the past, be currently occurring, or about to occur. The information provided must lead to a successful action of more than $1 million to be eligible for an award.
According to the SEC’s Office of the Whistleblower’s Annual Report, fiscal year 2013 has been a huge success. SEC’s Office of the Whistleblower gave out more than $14 million in awards to whistleblowers who contributed to the success of the agency’s enforcement actions. This year, the Office handed out its largest award since its establishment for $14 million. This award was to a whistleblower who gave information leading to an enforcement action that recovered substantial investor funds.
On Oct. 30, 2012, the SEC announced that it was awarding another whistleblower more than $150,000, an amount representing 30 percent of the money collected by the agency. This award is the sixth whistleblower to be awarded through the SEC’s whistleblower program since its establishment. The whistleblower’s information led to the agency successfully stopping a scheme from continuing to defraud investors. The whistleblower provided information that led the SEC to quickly shut down the ongoing fraud and wishes to remain anonymous. This award shows the momentum of the program and that it continues to serve the agency’s goal to stop ongoing fraud.
Lawyers in the Consumer Fraud Section at Beasley Allen continue to investigate fraud against both the federal and state governments and encourages anyone who knows of fraudulent activities to step forward. Potential whistleblowers have the right to not be retaliated against for doing the right thing and reporting the fraud they have witnessed. Anyone considering doing the right thing and blowing the whistle are strongly urged to seek legal advice before doing so. Lawyers at Beasley Allen are very familiar with the federal False Claims Act and the SEC Whistleblower Program and can guide whistleblowers along the process. If you have any information and would like to speak with a lawyer, contact Chad Stewart, Archie Grubb, Andrew Brashier or Larry Golston, lawyers in our Consumer Fraud Section, at 800-898-2034 or by email at Chad.Stewart@beasleyallen.com, Archie.Grubb@beasleyallen.com, Andrew.Brashier@BeasleyAllen.com or Larry.Golston@beasleyallen.com.
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