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 covering fraud or unlawful activity, leading to a sanction exceeding $1 million. Penalties, disgorgement, and interest paid count towards the $1 million threshold.
On May 25, 2011, The SEC adopted new rules implementing the Dodd-Frank Act, which is effective as of August 12, 2011. Principal Attorneys, R. Scott Oswald and Nicholas Woodfield at The Employment Law Group® law firm discuss the significance of these rules in an article titled, The SEC's new rules for the Dodd-Frank whistle-blower program, and published in Westlaw's Journal on Employment, Volume 26, Issue 3.
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:
What kinds of disclosures are eligible for an award? Back to top
Disclosures regarding securities law violations – including violations of the Sarbanes-Oxley Act or Foreign Corrupt Practices Act – that lead to a sanction exceeding $1,000,000 are eligible for an award. The whistleblower must disclose the violation to the SEC before a government authority requests the information from the whistleblower. A whistleblower who first discloses the violation internally to his or her employer will still be eligible for a reward if the whistleblower also discloses the violation to the SEC within 120 days.
What is “original information?” Back to top
Original information means information that is
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
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:
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 Act if 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 email@example.com.
The Employment Law Group® law firm recently published an article on the whistleblower provisions of the Dodd-Frank Act.
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The Employment Law Group® law firm represents employees nationally who have blown the whistle on corporate fraud and abuse and who have been the victims of discrimination, harassment, or other violations of their civil rights. With offices in Washington, D.C., San Francisco, and Los Angeles, California, The Employment Law Group® law firm’s seasoned trial attorneys have earned a highly desirable record of favorable settlements and verdicts on behalf of its clients.