July 23, 2010
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. Section 922 of the Act contains whistleblower provisions that are intended to encourage persons to come forward and report securities law violations to the Securities and Exchange Commission (“SEC”).
Under Section 922 of the Act, whistleblowers who voluntarily provide the SEC with “original information” (i.e., information that is unknown to the SEC and derived from the whistleblower’s independent knowledge or analysis) that leads to the SEC’s successful prosecution of the securities laws will receive between 10% and 30% of the total “monetary sanctions” imposed, when such sanctions exceed $1 million. Whistleblowers will also be entitled to a reward when their information results in a recovery by agencies other than the SEC, state regulatory or law-enforcement authorities, or foreign law enforcement authorities. Whistleblowers may present their information and claim a reward anonymously, by acting through counsel.
The Act also creates a private right of action for employees who have suffered retaliation from their employer because of their whistleblowing. The action may be brought in federal court; remedies that can be sought include reinstatement, double back pay with interest, as well as litigation costs, expert witness fees, and reasonable attorney’s fees.
“Whistleblowers have proven to be important players in recovering money lost due to fraudulent conduct. The Dodd-Frank Act applies this experience to the enforcement of the federal securities laws by providing powerful incentives and protections for potential whistleblowers to come forward and report fraud,” said Stanley D. Bernstein, senior partner of Bernstein Liebhard LLP.
Bernstein Liebhard Partner Rebecca Katz, a former senior counsel in the Enforcement Division of the SEC, where she served for nearly a decade and gained extensive experience in ferreting out fraud, said “I am excited about the private sector teaming with the SEC to report securities fraud and enforce the securities laws.”
Bernstein Liebhard has the experience and resources to represent whistleblowers who want to be represented before the SEC. Since its inception, Bernstein Liebhard has represented individual and institutional investors in complex securities class actions and shareholder rights litigation. The Firm is a nationally recognized plaintiffs’ law firm that has recovered almost $3 billion on behalf its clients and the classes that it represented, and achieved significant corporate governance reforms. Among other recognitions, the Firm has been named by The National Law Journal to the “Plaintiffs’ Hot List,” recognizing the top plaintiffs’ firms in the country, for the past seven consecutive years.