Understanding The SEC Whistleblower Program

On July 21, 2010, Congress signed into law the Dodd-Frank Wall Street Reform & Consumer Protection Act. This act is the most significant overhaul of our financial system since the Great Depression. One of the most important reforms contained in Dodd-Frank guarantees anyone who comes forward with information about possible financial violations of federal securities laws will have the full protection of the United States Government. This means for the first time in history the Securities and Exchange Commission (SEC) would be able to protect a potential witness from retaliation. Men and women who decide to come forward with information about a possible violation are known as whistleblowers.

Under this legislation, a whistleblower is awarded between 10%-30% of the money collected if their information leads to a successful enforcement action. The amount of the action must exceed 1 million dollars. The SEC Whistleblower Program has been in effect for a little over six years and has exposed many instances of financial wrong doing in the financial services industry. Recently one whistleblower was awarded over 17 million dollars by the SEC.

This recent whistleblower was represented by the law firm of Labaton Sucharow LLP, led by well-known SEC whistleblower lawyer Jordan Thomas, chairman of Labaton Sucharow’s Whistleblower Representation Practice. To date, this is the second largest award authorized under the SEC Whistleblower Program. The client provided invaluable information that eventually led to sanctions against one of the major players in today’s financial markets.

Under the SEC Whistleblower Program, anyone represented by a lawyer can remain anonymous. In most cases brought before the SEC, the whistleblower chooses to remain anonymous in order to avoid retaliation and possible blacklisting from the financial services industry. The SEC does not disclose any specifics in a case when a whistleblower plays a role, this is to avoid the possibility of indirectly disclosing the identity of the whistleblower.

Mr. Thomas stated, in this case, his client stepped forward when others in the industry were willing to keep quiet and allow innocent investors to be potentially harmed. Mr. Thomas predicts that in the future many of the SEC’s largest cases will be because of a courageous whistleblower. The first officer of a public company to receive a SEC reward was represented by Mr. Thomas and he was also the attorney who worked on the first case where the SEC was able to charge an employer with retaliation of a whistleblower.

Because of the protections and incentives available in the SEC Whistleblower Program, Labaton Sucharow LLP clients have the opportunity to report violations of federal securities to the SEC knowing they will remain anonymous and protected from retaliation while having the possibility of earning a substantial monetary reward.

One thought on “Understanding The SEC Whistleblower Program

  1. Emmy Prince Post author

    It is important to get a clear cut view on the SEC program knowing that it is an important prospect in transforming the way things were normally done. Based on uk best essays I think that the program is bound to unravel so many wrong practices that take place in corporate bodies although, more is still needed to make the whistle program a success.

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