Category Archives: Dodd-Frank Bounty

The Whistleblower Laws – What Everyone Needs to Know

June 2nd, 2011

alt= Are you a corporate or government whistleblower? Are you afraid? Confused?
Relax. Get informed and contact Sarelson Law Firm today.
What is the most important thing to know?

Before you quit your job and before you tell the world, contact a lawyer. Existing employees are in a far superior position than former employees and information already public is not protected. Retain experienced legal counsel to guide you through the process.

Who is your employer?
Various state and federal laws provide for different forms of protection for those engaged in whistleblowing activity. But perhaps the first and most important question is, “who is your employer?” Employees of publicly traded companies and their subsidiaries are protected under the Sarbanes Oxley Act and the Dodd Frank Act.
Other state and federal whistleblower laws are premised on the number of employees a company employs. Some laws require an employer to have 50 employees (the Family and Medical Leave Act), to have 20 employees (the Age Discrimination in Employment Act), or to have 15 employees (sex, race and religious discrimination).
Florida has a private whistleblower act that applies to employers with at least 10 employees and a civil rights act that applies to employers with at least 15 employees.
Other whistleblower statutes are premised on the amount of revenue the employer takes in. The Fair Labor Standards Act applies to employers with at least $500,000 in annual sales (not profit).
The Internal Revenue Service has a whistleblower statute premised upon the amount of money the company is failing to pay the IRS. The IRS wants to see at least $2M in unpaid taxes.
Public employees in Florida have their own specific whistleblower statute.
The first question a great whistleblower lawyer will ask is, “who do you work for?”
What are you blowing the whistle about?
Companies do stupid things and make bad business decisions all the time – that’s just part of business and risk taking. The key is to make sure that you are blowing the whistle about something that is more than just a bad business decision. Is the company violating securities laws? Is the company defrauding its investors and shareholders? Is the company using questionable accounting practices? Are senior officers making false disclosures to auditors and government agencies? If your employer is a government contractor, is the company defrauding the government by overbilling or under-performing? Is your employer violating anti-discrimination and anti-retaliation statutes? Is your employer violating wage laws by forcing employees to work “off the clock” or by not paying overtime? Is your company violating any local, state or federal law or regulation? If the answer is yes or potentially yes to any of these questions, then you have may have whistleblower status.
Who makes the best whistleblowers?
You do — the employee who cares about business ethics, the public servant who cares about government waste.
Anyone can obtain whistleblower status but senior employees generally have more access to more information. Employees in human resources, legal, accounting, bookkeeping, accounts receivable, finance and information technology are more likely to have insider information about corporate or government wrongdoing.
How am I protected?
Whistleblower statutes make it illegal to terminate an employee because the employee engaged in whistleblowing activity. Anti-retaliation provisions are very broad. Despite this, whistleblowers have to be prepared for significant blowback. Just because something is illegal does not mean that it will not happen.
What is the incentive to blow the whistle?
Most whistleblowers are motivated by an innate sense of right and wrong. If you are fired in retaliation, you generally are able to seek back and front pay for the financial loss and additional compensation for pain and suffering. In some circumstances, punitive damages are available.
Some whistleblowers are entitled to additional financial compensation by the government as a “thank you” for blowing the whistle. Three federal laws permit additional financial compensation – the Internal Revenue Service’s bounty program, the Securities and Exchange Commission’s Dodd-Frank bounty program and the False Claims Act’s recovery program.
What should I not do?
The absolute worst thing a potential whistleblower can do is to resign prematurely. Many employees claim that they were forced to quit or they just could not deal with the situation any longer. Generally speaking, an employee who voluntarily resigns cannot bring an employment or whistleblower lawsuit. Early retention of legal counsel is the key.

How do I pay for my attorney?
Sarelson Law Firm, P.A. generally accepts whistleblower cases on a contingency fee. We provide a full range of legal services, including presuit investigation, litigation, cooperation with various government agencies and media outreach.

Posted in Dodd-Frank Bounty, Qui Tam / False Claim Act, Retaliation, Whistleblower Suits | Comments Off

Posted in Dodd-Frank Bounty, Qui Tam / False Claim Act, Retaliation, Whistleblower Suits | Comments Off

Dodd-Frank Bounty: You Have Questions, We Have Answers

February 12th, 2011

What is the gist of the Dodd-Frank bounty program?
The Dodd-Frank Wall Street Reform and Consumer Protection Act created a reward or “bounty” program for individuals who provide original, inside information to the Securities and Exchange Commission. If the information leads to an enforcement action that results in over $1,000,000 in fines and penalties, then you, as the provider of the original information, are entitled to at least 10% of what the government recovers. The program is designed to incentivize people to come forward with knowledge of securities violations.

Who is a whistleblower?
A Dodd-Frank whistleblower is any individual or group of individuals who provide information relating to a violation of the securities laws to the Securities and Exchange Commission.
Who is not a whistleblower?
The law exempts certain individuals, including most government employees and law enforcement personnel. Certain auditors are also exempt. If you think you might be exempt from the law, don’t guess.
I’m an accountant. Can I be a whistleblower?
Possibly. The law does not apply to any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of section 10A of the Securities Exchange Act of 1934. The Securities and Exchange Commission will be implementing regulations that clarify the exemption for certain accountants.

I’m an attorney. Can I be a whistleblower?
Possibly. The statute does not exempt attorneys who have inside or confidential information.
Can I remain anonymous?
Yes. Anonymous claims are accepted provided you are represented by an attorney. But you need to disclose your identity when you receive your reward.
The Securities and Exchange Commission will keep your name confidential, unless and until it becomes necessary as part of an enforcement action.

What information do I have to provide?
The information has to be “original.”
The term “original information” means information that (i) is derived from the independent knowledge or analysis of a whistleblower; (ii) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and (iii) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.
If the information is already known to the SEC, or the information is otherwise publicly available, then you do not have “original” information. Normally company insiders are in the best position to have original information.
The information also has to be material and helpful. Vague information not helpful to an enforcement action will not qualify.

What types of illegal conduct is reportable?
• insider trading
• misrepresentation or omission of important information about securities
• committing a fraud on shareholders
• committing a fraud on the government
• manipulating the market prices of securities
• stealing customers’ funds or securities
• violating broker-dealers’ responsibility to treat customers fairly
• insider trading (violating a trust relationship by trading on material, non-public information about a security)
• selling unregistered securities
• any fraud with respect to stocks, bonds and other securities
• violating the Foreign Corrupt Practices Act (i.e., bribing foreign officials)
• violating the Sarbanes-Oxley Act, other aspects of the Dodd-Frank Act, the Gramm-Leach-Bliley Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 or the Investment Advisers Act of 1940
What is my financial incentive?
If the original information you provide to the SEC leads to a successful enforcement action by the government that results in excess of $1,000,000 in monetary fines and sanctions, then you, as the whistleblower, are entitled to between 10% and 30% of the government’s recovery. For example, if your information results in a $10,000,000 penalty, your “reward” is at least $1,000,000 and could be as high as $3,000,000. The SEC has discretion to determine your actual reward.

What protections do I have?
Dodd-Frank prohibits retaliation against employees. Your employer may not discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against you in the terms and conditions of employment because of any lawful act done by you…
(i) in providing information to the Commission in accordance with this section;
(ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or
(iii) in making disclosures that are required or protected under any other law, rule, or regulation subject to the jurisdiction of the Securities and Exchange Commission.
The prohibition against retaliation applies even if the government does not initiate an enforcement action.

What do I do when I have original, insider information about a securities law violation?
Contact Sarelson Law Firm today for a free initial consultation. We will evaluate your claim, and if we agree to represent you with respect to a claim, there’s no cost to you. If you fail to properly file a claim, you can be denied the reward you are entitled to. The law has strict deadlines about filing claims, so don’t delay.
This white paper is merely informational and is not a substitute for actual legal advice.