The Securities and Exchange Commission has just announced three record-setting rewards for whistleblowers under the Dodd-Frank Act. Two of the whistleblowers will share an award of nearly $50 million, while a third will receive over $33 million. The SEC says that the previous record was a 2014 award of $30 million.
Since 2012, the SEC has awarded 53 whistleblowers with more than $262 million. These awards are given to people who, alone or jointly, voluntarily share timely, original, credible information with the SEC that ultimately leads to a successful enforcement action. The awards range from 10 to 30 percent of the total money collected when the sanction exceeds $1 million.
The money comes from an investor protection fund created by Congress. The fund is financed by the sanctions paid by securities law violators. Whistleblower awards are never taken or withheld from investors who were harmed by the violations.
"These awards demonstrate that whistleblowers can provide the SEC with incredibly significant information that enables us to pursue and remedy serious violations that might otherwise go unnoticed," said the chief of the SEC's Office of the Whistleblower. "We hope that these awards encourage others with specific, high-quality information regarding securities laws violations to step forward and report it to the SEC."
One important factor in SEC whistleblowing is that it can be completely confidential. The SEC protects this confidentiality and works to avoid directly or indirectly revealing a whistleblower's identity. This is meant to avoid the potential for retaliation.
As we've discussed before, employer retaliation for whistleblowing is illegal. However, especially in cases involving Dodd-Frank noncompliance, there are specific steps that must be taken in order to engage the whistleblower protection provision of the law, or that of the Sarbanes-Oxley Act.
Unfortunately, retaliation is widely considered a problem. As a lawyer for these whistleblowers said, "The best protection against retaliation and blacklisting is the ability to report anonymously."
That may be the case, but there are other steps to take to protect your rights. If you are considering blowing the whistle on securities law violations or fraud against the government, you should discuss your situation with a whistleblower attorney to ensure your rights are protected and to minimize any possibility of retaliation.