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Whistleblower Windfall

August 19, 2010

Dulce J. Foster of Frederickson & Byron has published a fascinating memo on the Whistleblower Windfall provisions of Dodd-Frank. These new whistleblowing provisions extend dramatically the influence of those with inside information about corporate malfeasance.

  • Whistleblowers providing information to the SEC that lead to judicial or administrative action and monetary sanctions exceeding $1 million can receive between 10 and 30 percent of the recovered sanctions.
  • Stronger anti-retaliation measures can result in reinstatement for the whistleblower, twice the back-pay owed, and compensation for litigation and attorney’s fees.
  • Whistleblowers must provide “original” information to the SEC.
  • The SEC must implement rules to satisfy these provisions within 270 days of the enactment of Dodd-Frank – so by mid-April of 2011.

Ms. Foster concludes that all companies – but especially companies doing business overseas that must comply with the FCPA – should proactively review its internal controls and compliance policies, manage tightly its investigations to preserve adequate confidentiality, but be mindful of any actions that could be interpreted as covering up information or preventing employees from talking to the SEC.


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