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The SEC and CFTC Whistleblower Program

Whistleblowers are unsung heroes. They often risk career and reputation to report illegal conduct and to do the right thing in the face of corporate fraud or other illegal conduct.  In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) to combat illegal and fraudulent conduct on Wall Street and promote compliance with the federal securities and commodities laws.  The Dodd-Frank Act contains whistleblower provisions that authorize the Securities and Exchange Commission (“SEC”) to pay substantial cash rewards to whistleblowers that voluntarily provide the SEC with information about securities fraud and other violations of the securities laws, including the Foreign Corrupt Practices Act.   The Dodd-Frank Act also created a whistleblower program for the Commodities Futures Trading Commission (“CFTC”), which rewards whistleblowers for information regarding violations in the trading of commodities and on the currencies exchanges.

The Dodd-Frank Act enables the SEC and CFTC to pay an award to any individual, or group of individuals (i.e., two or more), who provide “original information” about a violation of the federal securities and commodities laws. To be “original”, the information must be unknown to the SEC or CFTC and derived from the whistleblower’s independent knowledge or analysis. Whistleblowers who provide “original information” that the SEC or CFTC uses in furtherance of an enforcement action can recover a reward of between 10% – 30% of the total amount of money collected by the SEC or CFTC.  Both U.S. citizens and foreign nationals may file whistleblower claims and receive a reward.

In addition to the reward, the SEC and CFTC whistleblower programs ensure complete anonymity of the whistleblower provided the whistleblower is represented by an attorney.  In some cases, a whistleblower’s identity may remain unknown even to the SEC or CFTC until the time comes for the payment of a reward. This confidentially provision is the strongest among any of the federal whistleblower programs, including the False Claims Act (under which qui tam actions are brought) and the Internal Revenue Service (“IRS”) whistleblower program.

Whistleblowers are further empowered to report corporate fraud or illegal conduct by the anti-retaliation provisions of the Dodd-Frank Act.  These provisions expressly prohibit retaliation by employers against individuals who become whistleblowers under the SEC and CFTC programs.  They provide whistleblowers with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act. Such an action may be brought in federal court and, if successful, can result in reinstatement, double back pay with interest, litigation costs, expert witness fees, and reasonable attorney’s fees.

Freiberger Haber LLP is dedicated to providing experienced, dedicated, and aggressive representation for whistleblowers looking to report violations of the federal securities and commodities laws to the SEC and the CFTC.  Throughout the career, Freiberger Haber LLP has represented individual and institutional investors in complex securities class actions and shareholder rights litigation.  Freiberger Haber LLP is a nationally recognized plaintiffs’ attorney who has lead or worked on cases that have recovered over $1 billion on behalf his clients and the classes that he represented, and achieved significant corporate governance reforms.  He has experience representing whistleblowers in cases involving complex financial fraud and has filed whistleblower claims with the SEC under the Dodd-Frank Act whistleblower program.

If you choose to blow the whistle on violations of the federal securities and commodities laws, Freiberger Haber LLP will help you report the wrongdoing, and assist you in complying with the regulations adopted by the SEC and CFTC under the Dodd-Frank Act.  Contact Freiberger Haber LLP for more information.

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