Whistleblowing is the act of reporting a company for illegal activity or misconduct. In the last few years, we have seen several high-profile whistleblowers come forward and report their companies for unethical behavior. These individuals put their careers at risk by speaking up. However, they did so with the belief that it was the right thing to do. Thankfully, in recent years there has been an increase in whistleblower programs designed to protect and support people blowing the whistle. If you work in a role where you have knowledge of potential illegal activity or other misconduct in your organization, you should know about these programs, which provide significant protections for whistleblowers, so you can take action if necessary.
U.S. Securities and Exchange Commission Whistleblower Program
The U.S. Securities and Exchange Commission Whistleblower Program was created as part of the Dodd-Frank Act. It offers financial rewards to people who provide information that leads to successful enforcement actions and monetary sanctions against companies and individuals that violate the federal securities laws. The program is designed to encourage whistleblowers to report potential violations in good faith and covers violations such as accounting fraud, insider trading, and false or misleading statements made to investors and the public. The SEC Whistleblower Program is one of the most generous whistleblower programs in the world when it comes to whistleblower awards, offering rewards of between 10% and 30% of the monetary sanctions collected in an enforcement action.
Sarbanes-Oxley Whistleblower Program
The Sarbanes-Oxley Whistleblower Program was established in 2002 by the Sarbanes-Oxley Act and offers financial rewards to people who report securities violations, including accounting fraud, false or misleading financial statements, and other misconduct related to the securities industry. The Act contains significant protections for whistleblowers to ensure that employees can safely disclose information that may harm investors. The program is designed to encourage employees to report potential violations in good faith and to protect them from retaliation and discrimination. The Act prohibits a publicly-traded company, or any contractor or agent of such company, from retaliating against an employee who blows the whistle on what they reasonably believe to be a violation of statutes prohibiting mail fraud, wire fraud, bank fraud, or securities fraud, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders.
Commodities Foreign Trade Commission Program
Section 748 of the Dodd-Frank Act required the establishment of a whistleblower program by the Commodities Foreign Trade Commission (CFTC). Whistleblowers may report a wide range of commodities frauds under the CFTC’s Whistleblower Program including misappropriation, false reporting, disruptive trading practices, price manipulation, or failure to make required reports. This also includes legal off-exchange activity, registrants’ failure to supervise, and other types of market manipulation. Whistleblowers who submit original information to the CFTC Whistleblower Office may be eligible to receive a whistleblower award of 10% to 30% of the monetary sanctions collected in a CFTC enforcement action or a Related Action. To be eligible to receive an award, a whistleblower must have voluntarily provided original information that led to the successful enforcement of the CFTC action or the Related Action.
Foreign Corrupt Practices Act
The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) share FCPA enforcement authority. Whistleblower awards are given to those who report international frauds and financial schemes, such as creating false company records and money laundering.
Whistleblowing is an important part of financial regulation that allows us to identify and address misconduct and fraud that might otherwise go undetected. However, whistleblower programs are not perfect. Many whistleblowers may not come forward for fear of retaliation. Fortunately, we have seen an increase in whistleblower programs in recent years. These programs offer protections for whistleblowers and whistleblower awards who report misconduct or fraud. They are essential for creating a culture that supports whistleblowing and tackling financial misconduct and fraud. If you are ready to blow the whistle, contact a whistleblower attorney today.
Timothy L. Miles, Esq.
Timothy L. Miles is a nationally recognized shareholder rights attorney raised in Nashville, Tennessee. Mr. Miles was recentely selected by Martindale-Hubbell® and ALM as a 2022 Top Ranked Lawyer, 2022 Top Rated Litigator. and a 2022 Elite Lawyer of the South. Mr. Miles also maintains the AV Preeminent Rating by Martindale-Hubbell®, their highest rating for both legal ability and ethics. Mr. Miles is a member of the prestigious Top 100 Civil Plaintiff Trial Lawyers: The National Trial Lawyers Association, a superb rated attorney by Avvo, a recipient of the Lifetime Achievement Award by Premier Lawyers of America (2019) and recognized as a Distinguished Lawyer, Recognizing Excellence in Securities Law, by Lawyers of Distinction (2019).
Timothy L. Miles
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