Whistleblower Protection Under The Dodd-Frank Act

It was enacted following the 2008 financial crisis to reform and regulate the financial industry to prevent similar crises in the future. The Act also introduced important measures which aid, protect and reward whistleblowers who disclose information to the Securities and Exchange Commission (SEC) related to financial fraud.

If you have a potential whistleblower claim, an experienced Dodd-Frank Act law firm can advise you on the validity of your claim. This article will take a closer look at the Dodd-Frank Act and the protection it offers to whistleblowers.

Background

In earlier years, whistleblowers were legally empowered through the False Claims Act to report acts of fraud which were committed against the government. However, this piece of legislation had its limitations as it did not cover instances of fraud which could take place within private institutions.

This meant individuals would not be afforded protection if they blew the whistle on a private employer such as a bank or investment firm unless it would result in some form of financial loss to the government. This called for a new piece of legislation which allowed individuals to report acts of financial wrongdoing within the private sector in instances where there wouldn’t be any direct financial impact on the government. This led to the creation of the Dodd-Frank Act which afforded protection to individuals who blow the whistle on non-governmental financial fraud.

Fraudulent Acts Covered

The SEC and law-makers are often one step behind when it comes to identifying and stopping financial irregularities. By empowering whistleblowers to speak up, they are better able to prevent such wrongdoings and punish those who commit them. While the gamut of actions that can be the subject of a successful Dodd-Frank Act claim is wide-ranging, below is a list of actions that the SEC has expressly forbidden: 

● Insider trading

● Ponzi schemes

● Accounting fraud

● Bribery and corruption

● Market manipulation

●     Anti-Money Laundering (AML) Violations

● Falsified or misleading financial statements 

Protections Under the Dodd-Frank Act

The Dodd-Franks Act established whistleblower functions within both the SEC and the Commodity Futures Trading Commission (CFTC), enabling individuals to report financial wrongdoing to these agencies. As a result, whistleblowers can disclose information about financial fraud within a private institution and if successful, receive a reward.

Under the Dodd-Frank Act’s Whistleblower Program, the SEC is empowered to offer whistleblowers who provide them with original information that results in a successful SEC enforcement, anywhere between 10% to 30% of the total monetary sanctions levied. 

While these rewards are only available to whistleblowers who aid in assisting CFTC or SEC investigations, the Dodd-Franks Act does prohibit and protect against retaliation against whistleblowers who assist other financial regulatory bodies, such as the Office of the Comptroller of the Currency (OCC) or the Consumer Financial Protection Bureau (CFPB). Retaliatory actions for which a whistleblower may be entitled to protection include:

● Termination or dismissal

● Demotion

● Reduced pay or overtime

● Unjustified disciplining

● Denial of benefits

● Failure to hire or rehire

● Intimidation or threats

● Harassment

The Dodds-Franks Act gives whistleblowers greater confidence in reporting financial misconduct within their organizations while bolstering regulators’ efforts in combating such behaviour.