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New Whistleblower Cash Award Program Adopted by the SEC
Washington, D.C., Maryland & Virginia
On May 25, 2011, federal regulators passed new rules making whistleblowers eligible for significant cash awards. If a tipster reports corporate fraud or misconduct to the Securities and Exchange Commission (SEC) and it leads to penalties of more than $1 million, the SEC would pay the whistleblower up to 30% of the money recovered.
These new rules will take effect in July 2011, but whistleblowers who provided information from July 2010 onward will also be eligible to receive awards. The U.S. Chamber of Commerce and some of America’s largest companies – such as Best Buy, FedEx, Google, AT&T, and Target – contested the new whistleblower program, which was mandated by the financial overhaul law enacted in 2010.
Employees Encouraged to Report Fraud Internally
Despite fears that employees would be encouraged to bypass internal company compliance programs, the new rules are designed to reward whistleblowers who report wrongdoing to company officials first, as long as:
- The companies pass the information on to the SEC
- The whistleblower provides the SEC with the information within 120 days
Once an employee has reported potential wrongdoing to their company, the SEC will officially designate them as a whistleblower, making them eligible for awards in the event of a $1M+ verdict or settlement.
The passing of these new rules represents the first time that whistleblowers are being given a financial incentive to report fraud or misconduct to company authorities. Advocates of the new program assert that whistleblowers can serve as an effective defense against corporate wrongdoing.
Protection for Whistleblowers
If you have become aware of fraud or wrongdoing conducted by an individual or company against the government, the experienced attorneys at Chaikin, Sherman, Cammarata & Siegel, P.C. can help you file an effective whistleblower lawsuit.
You do not need to fear reprisals if you report fraud. The American Recovery and Reinvestment Act includes specific provisions protecting whistleblowers from being fired, demoted, docked pay, or discriminated against in any way.
If you suspect fraud against the government, we can help you investigate the situation without compromising the case or your own legal status. Please contact the experienced whistleblower attorneys at Chaikin, Sherman, Cammarata & Siegel, P.C. today to schedule a free initial consultation. We serve clients in Washington D.C., Virginia, and Maryland.
