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Whistleblowers Earn Huge Rewards Under New Financial Reform Act

by | Aug 1, 2010 | Firm News

It’s always been possible — in theory — for whistleblowers to earn rewards for reporting certain types of wrongdoing to the Securities and Exchange Commission, but the new SEC whistleblower provisions in the recently-enacted financial reform act open the door to multi-million dollar awards for whistleblowers who report securities fraud to the government.

The Federal False Claims act, or qui tam statute, rewards whistleblowers who report fraud where the government is the victim. Now, thanks to the reform act, whistleblowers who report securities fraud may qualify to share in the recovery if the government recovers money through an enforcement action.

Under the new provisions, a whistleblower who provides the SEC with information about violations of securities laws is entitled to receive a reward ranging from 10 to 30% of the amount recovered by the government. SEC enforcement actions have led to recoveries in the hundreds of millions on numerous occasions. Other highlights of the new act include:

  • Confidentiality—A whistleblower who is represented by an attorney may remain anonymous.
  • Protection from retaliation—Whistleblowers who are retaliated against by their employer may sue their employer.
  • Broader range of illegal conduct covered—Previously, only whistleblowers who reported insider trading could receive an award, rewards were not mandatory, and rewards were very rare. Now whistleblowers can receive a reward for reporting any type of securities fraud, such as:
  1. Inflated profits due to illegal or non-existent sales
  2. Fraudulent accounting practices
  3. Violations of the Foreign Corrupt Practices Act
  4. Coverups of negative information

An award to the whistleblower is mandatory if the information reported leads to a government recovery in excess of $1 million.

Effective legal representation is crucial for whistleblowers. The law firm of James, Hoyer, Newcomer, Smiljanich & Yanchunis, P.A., has for over 15 years focused its practice on representing whistleblowers. The experience and expertise of our team of attorneys, investigators, and support staff is unmatched when it comes to the process of navigating a whistleblower client through the complex dealings with the government required in any whistleblower case.

A whistleblower is only eligible for an award if the information provided to the government is not already known to the government. In other words, if another whistleblower has already reported the fraud to the government, it may be too late. Don’t delay—if you have information concerning fraud contact us today!

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