The Act was passed in response to the 2008 Financial Crisis to reform and regulate financial institutions to avoid similar crises. The Act introduced measures that protect, reward and aid whistleblowers for revealing information about financial fraud to the Securities and Exchange Commission.
A Dodd-Frank Act lawyer can help you determine the validity of a claim if you are a whistleblower. This article will examine the Dodd-Frank Act, and the protections it provides to whistleblowers.
Background
Earlier, whistleblowers had the legal authority to report fraud committed against the government through the False Claims Act. This piece of legislation was limited in that it didn’t cover frauds committed by private institutions.
Individuals would not receive protection if they reported a private employer, such as a investment firm or bank, unless the action resulted in a financial loss for the government. A new law was needed to allow individuals to report financial misconduct in the private sector when there would be no direct financial impact for the government. The Dodd-Frank Act was created to protect individuals who report non-government financial fraud.
Fraudulent Acts Covered
SEC and lawmakers are often behind in identifying and stopping financial irregularities. Whistleblowers can help prevent financial fraud and criminal activity by speaking up. The Dodd-Frank Act allows for a wide range of claims. However, the SEC has prohibited certain actions.
* Insider trading
* Ponzi schemes
* Accounting fraud
* Corruption and Bribery
* Market manipulation
* Anti-Money Laundering (AML) Violations
* Financial statements that are false or misleading
Dodd-Frank Act Protections
The Dodd-Franks Act created whistleblower functions at the SEC as well as the Commodity Futures Trading Commission. This allows individuals to report financial fraud to these agencies. Whistleblowers are able to disclose information regarding financial fraud in a private institution, and receive a reward if they succeed.
The Dodd-Frank Act Whistleblower Program allows the SEC to reward whistleblowers with up to 30% of total financial sanctions if they provide original information which results in an SEC enforcement.
The Dodd-Franks Act prohibits and protects against retaliation of whistleblowers that assist other financial regulatory agencies, such as the Office of the Comptroller of the Currency or the Consumer Financial Protection Bureau. Whistleblowers may be protected from retaliatory acts such as:
Termination or dismissal
* Demotion
* Reduced Pay or Overtime
* Unjustified disciplining
* Deny benefits
* Rehiring or failing to hire
* Threats or intimidation
* Harassment
Dodd-Franks Act provides whistleblowers with greater confidence to report financial misconduct in their organizations, while also bolstering the efforts of regulators in combating this behaviour.