On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Act became law. Among its reforms are the creation of cash rewards for corporate employees or public company insiders who expose securities fraud and measures to protect them from retaliation. The new law promises whistleblowers 10 to 30% of penalties obtained by the Securities and Exchange Commission (SEC) for original information that contributes to the recovery of at least $1 million.
Who can be an SEC whistleblower?
If you know of any “original information” relating to any financial fraud such as improper revenue recognition schemes, asset valuation fraud, concealed liabilities and expenses fraud, improper or omitted disclosures, insider trading, or Ponzi schemes, then you can report such misconduct to the SEC and be rewarded for it.
SEC Whistleblower Protections
The new law provides whistleblower protection against retaliation. The Dodd-Frank Act expressly prohibits retaliation by employers against whistleblowers and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act.
Under the law, an employee who successfully proves in court that he’s been discriminated against and discharged for blowing the whistle on his employer would be entitled to double back pay, attorney’s fees, and other costs. A wrongfully terminated whistleblower must also be reinstated and employers are prohibited from firing, demoting, suspending, threatening, harassing, or discriminating against a whistleblower.
Learn more about reporting a financial fraud.