Dodd Frank Whistleblower

The Dodd-Frank Act

The Securities and Exchange Commission adopted rules and regulations important provisions to protect American consumers. Under this significant change in American law effective in 2011, this act authorizes the Security and Exchange Commission (a regulatory entity under Federal law) to pay monetary compensation to people who voluntary provide information brand new information not known to the Securities and Exchange commission that results in the adjudication of securities laws existing under Federal legislation where financial penalties exceeding one-million dollars ($1,000,000.00) are imposed against the offending person or entity. Those people who provide this information are referred to as "whistleblowers".

Allowable Awards to Whistleblowers

Under the Dodd-Frank Act, if the offending party is penalized more than the one-million dollar ($1,000,000.00) threshold and pays any portion of it, the "whistleblower" whose information resulted in the assessed penalty is to receive between ten (10) and thirty (30) percent of the penalty actually collected. This act expressly prohibits any employer from retaliating against any person who assisted the Securities and Exchange Commission as to possible violations of Federal securities laws.

One significant aspect of the Dodd-Frank Act was its broad definition of an "employee" that was protected under it to encompass all employees of subsidiaries if a company and affiliates of public companies in general as opposed to being a direct employee of the offending company shared with violation of federal regulations promulgated by the Securities and Exchange Commission. In the past, unless the "whistleblower" was a direct employee of the company that violated federal securities laws, he or she was not protected against retaliation for providing information to the Securities and Exchange Commission.

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