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Securities Fraud: Your Rights as a Whistleblower

Posted: Jan 07, 2016 | Posted in:

If you have information about a violation of federal securities laws or a possible securities fraud, you may be able to receive compensation from the government if you come forward. The Dodd-Frank Act gives private citizens the opportunity to help the government fight securities fraud and receive a portion of the money the government recovers based on the information they provide.

Citizens who come forward with information are known as “whistleblowers,” and whistleblowers rightfully receive strong incentives and protections under federal law.

Compensation Available to Whistleblowers

Under the Dodd-Frank Act, whistleblowers who provide “original information” about possible securities law violations can receive between 10 and 30 percent of the amount the Securities and Exchange Commission (SEC) recovers in a subsequent enforcement action. In order to be entitled to compensation, the information you provide must lead to sanctions of at least $1 million. Given that the SEC generally focuses its enforcement efforts on cases where they will have the most impact, in most cases this threshold is easily met.

The other basic requirements in order to be eligible for whistleblower compensation include:

  • Providing “original information.” This means that the SEC does not already have the information you provide, and that your information leads the SEC to either open or re-open an investigation, or to pursue a new line of inquiry in an ongoing investigation.
  • Providing the information voluntarily. You are not entitled to compensation if you only provide the SEC with information upon request.
  • Providing the information through appropriate channels. In order to qualify for compensation, you must follow the SEC’s rules for submitting whistleblower information.

Note that you are not required to be an employee of the company that is violating securities laws in order to file a whistleblower claim. However, if you are an employee, the Dodd-Frank Act provides additional protections as well.

The Dodd-Frank Act’s Protections Against Employer Retaliation

The Dodd-Frank Act specifically prohibits employers from retaliating against whistle-blowing employees. The law defines “retaliation” to include:

  • Demotion
  • Discharge (termination)
  • Discrimination
  • Harassment
  • Suspension
  • Threats

When you file a whistleblower claim, the SEC will protect your identity to the fullest extent possible. However, if you provide information about a potential securities law violation to the SEC and your employer retaliates against you, you can file a lawsuit in federal court. If your claim is successful, you can receive reinstatement of your old position, double back pay, costs, attorneys’ fees and expenses.

What to Do if You Have Information About Possible Securities Fraud

If you have information about a possible securities law violation, you should speak with an attorney as soon as possible. While you can report a violation to your employer and still qualify as a whistleblower, there are strict time limits once you file an internal report. In addition, reporting a violation internally may not necessarily be in your best interests. An experienced securities fraud whistleblower attorney will be able to help you protect yourself and preserve your right to compensation.

Do You Have Information about Possible Securities Fraud? Contact Zamansky LLC

A securities fraud attorney with Zamansky LLC has experience helping clients investigate and pursue securities fraud whistleblower claims. To speak with one of our attorneys in confidence, call (212) 742-1414 or schedule a free, no-obligation consultation online today.