In the wake of the 2008 financial crisis, in 2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. One section of the sweeping new law established a program to encourage whistleblowers within the financial industry to report violations of the law to the Securities and Exchange Commission.
The SEC just announced it awarded $17 million to the former employee of a financial services firm because their tip led the SEC to a successful investigation and enforcement action.
That’s the second highest award so far. In 2014, the SEC gave a whistleblower $30 million. In October 2013 they gave another whistleblower $14 mllion. The law allows for whistleblowers to receive from 10 percent to 30 percent of money from SEC enforcement actions that collect over $1 million. A total of 32 whistleblowers have received a total of $85 million in the five years since the program began.
Information from this whistleblower enabled SEC to conserve time and resources as it collected the evidence necessary to act against the guilty company, the SEC Enforcement Chief Andrew Ceresney said, according to the Washington Examiner.
The SEC does not release the names of the companies it takes enforcement actions against. The identify of the whistleblower is kept secret to protect them from retaliation and blacklisting.
The law firm of Labaton Sucharow became the first in the country to set up a practice dedicated exclusively to representing those SEC whistleblowers.
Labaton represented the whistleblower just awarded the $17 million for their part in the SEC’s successful sanction against their former employer. This whistleblower exposed “significant” problems with in a major player in the financial services industry.
Jordan A. Thomas is the head of Labaton’s Whistleblower Protection Practice. He used to be an Assistant Director and Assistant Chief Litigation Counsel at the SEC, in their Division of Enforcement.
Whistleblowers may also collect additional compensation from sanctions collected by other regulators and law enforcement. The law protects them from retaliation by their employers. And, if represented by a law firm, they may make their reports anonymously. Learn more about the SEC Whistleblower attorneys
Labaton represented the whistleblower who received the $17 million dollar award. According to Thomas, that is just the beginning. He predicted the SEC’s most significant cases would come from whistleblowers.