Block on Trump's Asylum Ban Upheld by Supreme Court
When the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010, it included an expanded whistleblower bounty program. As an incentive to report violations of financial regulations, whistleblowers are entitled to 10 to 30 percent of an enforcement action's recovery.
If they can ever get it. According to a review by The Wall Street Journal, 83 percent of the whistleblowers who have applied for their awards have yet to have their claims addressed.
The SEC has doled out only 17 whistleblower awards since 2011. To be sure, many of these were for tens of millions of dollars -- but most claims have languished, some for years, waiting for a decision. The Journal examined information gathered through a FOIA request and found that, of the 297 tipsters who had applied for awards since 2011, only about 50 of them had received any decision.
The delay can be explained in part by the popularity of the program. In 2014, over 3,600 tips were submitted to the SEC, leading to more than 600 investigations. But some worry that the enthusiasm for the program will dissolve should payouts take too long to materialize.
The SEC's snail's pace isn't the only problem facing the whistleblower program. The Second Circuit, home to Wall Street and much of the nation's securities litigation, has repeatedly narrowed the scope of the program.
Last September, that court ruled that oversees whistleblowers weren't entitled to Dodd-Frank protections. A compliance officer at Seimens China had reported illegal kickbacks to management and was promptly fired. He sought redress under the Act's anti-retaliation provisions and was denied, as the court ruled Dodd-Frank's protections did not apply extra-territorially.
In March, the Second Circuit again narrowed its reading of the act. Not only did it not apply to whistleblowing abroad, its award provisions couldn't be read to apply retroactively. In that case, a whistleblower had first informed the SEC of wrongdoing long before the Act's passage, but continued to provide information afterward. That wasn't good enough for the SEC or the Second Circuit, and the informant was denied his award.
Those limiting decisions, however, deal with outlier cases. The SEC's delay in responding to claims is much more widespread. Only time will tell what it's long-term impact will be.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.