Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (also known as “Dodd-Frank”) on July 21, 2010. One of the most carping reforms that arose from this new legislation was the establishment of the SEC’s Dodd-Frank Whistleblower Program (commonly referred to as the “SEC Whistleblower Program”) in the summer of 2011.
The program allows whistleblowers to get an award when they voluntarily provide original information that leads to successful enforcement action.
Unlike the False Claims Act, SEC Whistleblower claims are filed directly with the SEC; there is no federal lawsuit. This also means that the whistleblower does not have a right to pursue the claims in a qui tam filing if the SEC decides not to do so itself.
Although whistleblowers are often portrayed as people with inside information about a company’s wrongdoing, being a company “insider” is not an SEC whistleblower requirement. In fact, the SEC itself has acknowledged that “outsider” whistleblowers who provide the SEC with critical intelligence that uncovers fraud can also receive rewards under the program.
Successful SEC enforcement actions can result in whistleblower awards ranging from 10-30% of the money gathered as sanctions in the social control action, as long as those countenances exceed $1 million.
Also unlike the False Claims Act, the SEC whistleblower program allows whistleblowers to file anon and endeavors to keep whistleblowers’ individuality covert from the public.
There is a respective structure that the SEC whistleblower program defends its whistleblowers. First, the program allows whistleblowers to report what they witnessed onymous, with their SEC whistleblower lawyers communicating with the SEC on their behalf, so that odd the SEC is not aware of the identity of the whistleblower. Although an SEC whistleblower can initially remain anonymous even to the SEC, it will have to reveal its identity to the SEC in order to get an award. However, the SEC will continue to hold the whistleblower’s confidentiality from the public.