Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Securities and Exchange Commission (SEC) to pay a reward to a whistleblower who voluntarily discloses original information regarding violations of the Foreign Corrupt Practices Act (FCPA), leading to a sanction exceeding $1 million. Penalties, disgorgement, and interest paid count towards the $1 million threshold.
What is the Foreign Corrupt Practices Act? Back to top
The Foreign Corrupt Practices Act (FCPA) prohibits the bribery of foreign government officials by United States persons or companies.
Is a reward available for reporting violations of other laws to the SEC? Back to top
The SEC must offer a reward in return for any original information regarding violations of securities laws, rules, or regulations, including the Foreign Corrupt Practices Act (FCPA).
How much is the SEC whistleblower reward? Back to top
The amount of the reward ranges from 10 to 30 percent of the amount recovered by the SEC as a result of the information the whistleblower provides. The SEC will consider the following factors to determine the amount of the reward:
- the significance of the information provided by the whistleblower;
- the degree of assistance provided by the whistleblower;
- the interest of the SEC in deterring violations of securities laws; and
- other factors that the SEC may establish by rule or regulation.
What is “original information?” Back to top
Original information means information that is
- derived from the independent knowledge of the whistleblower;
- not known to the SEC from any other source, unless the whistleblower is the original source of the information; and
- not exclusively derived from an allegation made in a judicial or administrative hearing, a government report, audit, or investigation, or the news media, unless the whistleblower is a source of the information.
Are there restrictions on who can receive a SEC whistleblower reward? Back to top
The SEC is prohibited from granting a reward to a whistleblower who
- is convicted of a crime related to the judicial or administrative action for which the whistleblower provided information;
- gains the information by auditing financial statements as required by law;
- fails to submit information to the SEC as required by a SEC rule; OR
- is an employee of the Department of Justice or an appropriate regulatory agency, a self-regulatory organization, the Public Company Accounting Oversight Board, or a law enforcement organization.
To be eligible to receive a reward, does a whistleblower have to be employed by the company committing the SEC violation? Back to top
No. Whistleblowers are not required to have worked at the company that committed the SEC violation.
Are employees who blow the whistle to the SEC protected from retaliation by their employer? Back to top
Yes. Employers are prohibited from terminating or discriminating against an employee who discloses information about fraudulent or unlawful conduct to the SEC. Employers are also prohibited from retaliating against employees who participate in a SEC investigation or any judicial or administrative proceeding that is related to a whistleblower's disclosure.
What forms of retaliation are prohibited? Back to top
The Dodd-Frank Act prohibits a broad range of adverse employment actions, including firing, demotion, suspension, threatened adverse employment actions, harassment, or any conduct that would dissuade an employee from reporting SEC violations.
What compensation can a prevailing employee recover? Back to top
A prevailing employee can:
- be reinstated to their former position;
- recover double the wages owed to the employee in the form of back pay with interest; and
- recover attorney fees and litigation costs, including expert witness fees.
Are SEC whistleblower retaliation claims subject to mandatory arbitration? Back to top
No. The employee's right to file a whistleblower retaliation claim under Section 922 cannot be waived as a condition of employment or by a mandatory arbitration agreement.
Am I protected from retaliation if I report SEC violations internally through my employer's compliance program? Back to top
You likely would be protected under the Sarbanes-Oxley Actif those SEC violations also relate to fraud committed by the company against its shareholders. Furthermore, the SEC has recently proposed new rules that would protect an employee who reports SEC violations internally to the employer so long as the employee also reports the violations to the SEC within 90 days.
What should I do if I've uncovered a SEC violation? Back to top
If you have uncovered a violation of SEC regulations or feel that you have been the subject of retaliation because of your disclosure regarding violations of SEC regulations, contact The Employment Law Group® law firm at 1-888-603-0983 or firstname.lastname@example.org.
The Employment Law Group® law firm recently published an article on the whistleblower provisions of the Dodd-Frank Act.
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