On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or Act) was enacted. Dodd-Frank consists of 16 titles and is over 2,000 pages long. Within these pages are the new whistleblower provisions that increase awards and pro¬tections to persons assisting the Securities and Exchange Commission (the “SEC”) in enforc¬ing the securities laws and regulations. The Act establishes new bounties and protections for whistleblowers who report violations of the securities laws. Unlike the Sarbanes Oxley Act of 2002, the Dodd-Frank Act applies to all companies public or private regardless of whether they are SEC reporting issuers.
Definition of Whistleblower
For purposes of the Act a whistleblower is an individual who, alone or jointly with others, provides information to the SEC relating to a possible violation of the securities laws, that has occurred, is ongoing, or is about to occur.
Bounties and Increased Eligibility
Whistleblower bounties are now available for securities law violations by both private and public companies for any judicial or administrative action brought by the SEC under the securities laws where the resulting monetary sanctions exceed $1,000,000. Whistleblowers are entitled to receive bounties of a minimum of 10% and a maximum of 30%.
Original Information” and “Independent Knowledge”
To be eligible for a Dodd-Frank bounty, the Whistleblower must provide original information from the whistleblower’s own independent knowledge or analysis. The original information cannot be already known to the SEC from another source. Independent information can be obtained from third parties; and independent analysis can be based upon the whistleblower’s analysis of public sources such as SEC or OTCC Markets filings and reports.
Anti-Retaliation Provisions
For purposes of the anti-retaliation protections afforded by Dodd-Frank, whistleblower is defined differently. An individual is a whistleblower if he or she possesses a reasonable belief that the information provided relates to a possible securities law violation; and he or she reports that information to the SEC. Dodd Frank provides significant protections to whistleblowers including that the whistleblower may remain anonymous, and their reports may be made through an attorney. The SEC may not disclose the identity of the whistleblower before payment of an award. To receive a bounty the whistleblower must be identified.
Remedies for Retaliation
Section 922, protects whistleblowers from retaliation and provides for a private right of action in federal district court, for any form of retaliation; and an non-waivable right to federal jury trial, Retaliation can come in many forms including harassment, retaliatory discharge, reduction in assignments, intimidation and retaliatory litigation. Damages recoverable include actual and compensatory damages.
The statute of limitation for actions for retaliation is 6 years, after the date the retaliation occurred, or 3 years after discovering retaliation (within 10 years).
For further information about this memorandum please contact Brenda Lee Hamilton at 561-416-8956 or by email at BHamilton@securitieslawyer101.com.
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