The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 21, has ushered in a sweeping overhaul of the financial services industry. Through a patchwork of whistleblower bounties and protections, the act also creates considerable new challenges for many employers. By providing financial incentives, the act makes it more likely that employees will raise compliance concerns directly with regulators and avoid internal procedures. At the same time, the act also grants significant anti-retaliation protections to employee whistleblowers. As a result, those employers covered by the act must prepare for the likelihood of increased and publicized whistleblower complaints coupled with challenges in legitimately disciplining or terminating the employment of those who also may qualify as whistleblowers.
Most significantly, § 922 of Dodd-Frank amends the Securities Exchange Act of 1934 to provide employees — at both publicly and privately held companies — bounties for supplying “original information” to the U.S. Securities and Exchange Commission (SEC) that leads to a successful enforcement action. To be eligible for a bounty, individuals must provide information that is “derived from the independent knowledge or analysis of a whistleblower,” “not known to the SEC from any other source, unless the whistleblower is the original source of the information” and “not exclusively derived from an allegation made in a judicial or administrative hearing, in a government report, hearing, audit or investigation, or from the news media, unless the whistleblower is a source of the information.”
