You may have seen the recent public service announcements with Michael Douglas, channeling his famous role from the movie Wall Street, where he played Gordon Gekko, encouraging anyone knowing about insider trading, or other suspected financial fraud, to report this crime to the FBI.
If not, here’s the public service announcement.
Therefore, if you believe you have information to provide to a government agency about financial fraud, you should contact an attorney who can help you walk through the process of supplying the right information, following the right procedures, to the SEC who can both provide you with certain financial incentives and protections.
The recently enacted Dodd-Frank Act authorized the SEC to enact rules, which created the Office of the Whistleblower. The regulations provide that if your tip, as a whistleblower, leads to a penalty of more than $1 million, the whistleblower can get between 10-30% of the penalty. In addition, they have put protections in place regarding anonymity and anti-retaliation measures so whistleblowers do not legally face repercussions for their reporting.
Many people have already shared their tips with the SEC since these whistleblower provisions were put into place. For example, in the first 7 weeks the SEC began offering the reporting features it received 334 tips. Further, the head of the Office of the Whistleblower, Sean McKessy recently announced in late February 2012 that the SEC has received over 2,000 calls to the whistleblower hotline since its inception in May 2011.
As of the end of fiscal year 2011 the SEC had not yet paid any awards to whistleblowers, according to the Annual Report on the Dodd-Frank Whistleblower Program for Fiscal Year 2011, provided by the SEC to Congress. However, this not surprising since the regulations are so new.
Once any awards over $1 million are made the Office of the Whistleblower lists them on their website, in their list of covered actions, along with the deadline for a whistleblower whose original information, provided after July 21, 2010, led to this successful enforcement action, to apply to claim their whistleblower award. You can see the list of possible awards here.
Although no awards have yet been provided to a whistleblower that we’re aware of, at the time of this writing, Mr. McKessy has further announced that the SEC had funded the Investor Protection Fund to the tune of $453 million. This fund was established by the SEC to compensate successful whistleblowers, meaning that money is available to encourage those knowing of financial fraud to come forward with what they know.
For example, the SEC is currently focusing on cracking down on insider trading. Therefore, these tips will most likely receive additional scrutiny and consideration at this time.
If you have information that you believe may qualify you as a possible whistleblower we can help. Starr Austen & Miller has experience in working with whistleblowers and other informants and can assist you in navigating the maze of federal laws while at the same time protecting your rights and helping you recover all financial incentives you are entitled to. Please contact us for a free consultation right away.
[Sources: Dodd-Frank Whistleblower Annual Report, Huffington Post]