SEC Whistleblowers

Congress established the SEC (Security and Exchange Commission) Office of the Whistleblower in 2011 as part of the Dodd-Frank Act. Under the program, whistleblowers can be awarded 10 to 30 percent of the money recovered in the whistleblower action for providing high-quality, original information that leads to an enforcement action that results in over $1 million in sanctions.

Blow the Whistle on Money Laundering

With a stated interest in preventing money laundering, the SEC can address money laundering issues under the Dodd-Frank Act whistleblower provisions. The SEC can take action when:

  • a bank's or corporation's money laundering activities cause its records to be inaccurate
  • money laundering violations result in material mistatements in financial disclosures of securities issuers
  • financial institutions fail to follow procedures under the USA Patriot Act, such as customer-identification requirements

The Patriot Act imposes important obligations on broker-dealers to prohibit money laundering and terrorist financing.

The Dodd-Frank whistleblower provisions are not limited to SEC actions. Section 922 provides recovery in “related action[s],” and actions arising from original information provided to the SEC. .

Confidentiality of Whistleblowers

Whistleblowers can submit tips anonymously to the SEC Office of the Whistleblower, but if you wish to submit anonymously, you will need a whistleblower attorney to represent you. The SEC will protect your identity to the fullest extent that is possible, however some circumstances require disclosure of a whistleblower's identity such as the production of documents or information in a court proceeding that would reveal the identity of the whistleblower.

Factors that Determine the Whistleblower Award

The SEC uses seven different factors to determine the percentage of your award for acting as a whistleblower. These factors are:

  • The significance of the information you provided
  • The amount of assistance you provided
  • Whether a law enforcement interest would be advanced by issuing a higher award
  • The level of participation you engaged in with internal compliance systems within your company
  • Any culpability for the fraud on your part
  • Any unreasonable delay in reporting the fraud
  • Interference with internal compliance systems

To speak with a whistleblower attorney about your insider knowledge of fraudulent activity and determine if you should become a whistleblower, please contact James T. Ratner or call (845) 688-5222 today.

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