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The Trading Mesh

Has #Dodd-Frank whistleblower program shown effects yet?

Wed, 18 Apr 2012 12:54:54 GMT           


In August 2011, the controversial Dodd-Frank whistleblower rules took effect, raising concerns that the number of employees reporting corporate wrongdoing to the government, already growing as a result of the incentives under the False Claims Act and other statutes, would mushroom out of control.

The Dodd-Frank Act aims to increase oversight and transparency into the U.S. financial system. Section 922 of the Act provides monetary incentives and protection to whistleblowers who provide new information to the Securities and Exchange Commission (SEC) if the information leads to a successful enforcement action. Qualifying individuals may receive up to 30% of the total monetary sanctions that result from the whistleblower’s information if the recovery is more than $1 million in penalties.

Now that the SEC has logged at least seven full months of the Dodd Frank whistleblower program, study shows that overwhelming majority of the qui tam plaintiffs still report their concerns internally first. This mirrors the anecdotal stories from advocates who say that by the time most whistleblowers come forward, they have already tried to solve the problems within the organizations, not once, but three, four, nine times, and have been kicked in the shins (or far worse) for their troubles. But SEC officials also say in March that the quality of tips they have received is surprisingly high and some have resulted in “huge cases”.

At the Trading Show Chicago 2012 event, regulatory issues will be a hot topic. In particular, Mr. Jordan A. Thomas, Partner at Labaton Sucharow LLP, will give a special presentation on the Dodd-Frank whistleblower provision and its implications.

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