The SEC Whistleblower Program Rewards Whistleblowers For Reporting Violations of The Securities Laws and The Foreign Corrupt Practices Act

In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) as part of a comprehensive overhaul of the country’s financial regulatory system.  The Dodd-Frank Act creates an incentive program that rewards and protects any person who wants to blow the whistle on individuals or companies who violate the securities laws and the Foreign Corrupt Practices Act (“FCPA”).  The Dodd-Frank Act also created a whistleblower program for the Commodities Futures Trading Commission (“CFTC”), which rewards whistleblowers for information regarding violations in the trading of commodities and on the currencies exchanges.  Whistleblowers who provide information that the Securities and Exchange Commission (“SEC”) uses in furtherance of an enforcement action can recover a reward of between 10% – 30% of the total amount of money collected by the SEC.


If the whistleblower provides original information that leads to the recovery of monetary sanctions exceeding $1 million by the SEC, the whistleblower will receive between 10% – 30% of the total recovery.  Monetary sanctions include any monies, including penalties, disgorgement and interest.  The amount of the reward varies, depending on such factors as the significance of the information provided and the degree of assistance provided by the whistleblower.  Congress gave whistleblowers a share of the recovery that results from their information as an incentive to step forward and take the personal and professional risk involved in reporting violations of the securities and commodities laws and the FCPA.


In addition to creating a program for whistleblowers to blow the whistle on violators of the securities and commodities laws and the FCPA, Congress included a number of provisions to protect whistleblowers from retaliation by their employers.  Recognizing that whistleblowers will stop reporting fraud if they are the subject of actual or threatened retaliation, Congress prohibited employers from discharging, demoting, suspending, threatening, harassing, or discriminating against whistleblowers who blow the whistle on fraud.  A whistleblower who has been retaliated against can file a civil lawsuit in federal court against his or her employer and seek reinstatement with the same seniority status, two times the amount of back pay owed to the employee, and reimbursement of litigation costs, including out-of-pocket expenses, expert witness fees and attorneys’ fees.  The SEC can also enforce the Dodd-Frank Act’s anti-retaliation provisions by bringing cases against retaliating employers in federal court.


To further protect whistleblowers from employer retaliation, Congress allows whistleblowers to blow the whistle anonymously, as long as the information they possess is provided by an attorney who submits the information on the whistleblower’s behalf.  The SEC, CFTC, and any other government agencies assisting in an investigation, must keep the information provided confidential until the SEC or CFTC is required to disclose the information in connection with a public proceeding or pay the whistleblower reward.  The confidentiality provisions of the Dodd-Frank Act are so strong that the SEC, CFTC, and any other government agencies assisting in an investigation, cannot disclose any information, including information provided by a whistleblower, which can reveal the identity of the whistleblower.


Bernstein Liebhard LLP is dedicated to providing experienced, dedicated, and aggressive representation for whistleblowers looking to report violations of the federal securities laws and the FCPA to 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 more than $3.5 billion on behalf its clients and the classes that it represented, and achieved significant corporate governance reforms.   The whistleblower practice group, which includes attorneys who have substantial experience fighting securities fraud, will use their experience to assist you in blowing the whistle on those who violate the federal securities laws and the FCPA.

If you choose to blow the whistle on, among other things, violations of the federal securities laws, the attorneys at Bernstein Liebhard LLP will help you report the wrongdoing, and assist you in complying with any regulations adopted by the SEC under the Dodd-Frank Act.  Contact Michael S. Bigin or Laurence J. Hasson for more information.