Though it is not yet known whether Congress will repeal the restrictions imposed by Dodd-Frank, the rollback of several of its regulations has led to concerns among Sarbanes-Oxley lawyers about the potential for whistleblower protections to be diminished. Though the GOP has long favored the elimination of many of Dodd Frank’s regulations, its impact on whistleblowers is of concern to all, especially as the Choice Act passed by the House of Representatives in 2017 specifically addresses some of the whistleblower laws.
It is not at all clear that the Choice Act will pass in the Senate. There is a general consensus that the 60 votes that are needed are not there for the bill as it stands, and there is bipartisan action there to rewrite several of its terms. But it is still important to understand how the proposed restrictions will affect Sarbanes-Oxley whistleblower protections.
As it stands right now, the Security and Exchange Commission’s whistleblower program allows all whistleblowers who report misconduct to receive an award of between ten and thirty percent of the money collected in an SEC enforcement action as a reward for having provided the government with the information that initiated their investigation. This was true even if the whistleblower was an active participant in the wrongdoing, as long as they were not criminally convicted or charged in the matter. The Choice Act would bar this award from being given to co-conspirators. Without a financial incentive, people who are aware of fraud would be less likely to come forward.
The stated goal of the Choice Act and the repeal of Dodd-Frank is to minimize regulation on the financial industry. This could end up working against the SEC’s ability to detect fraud and securities violations. Though it makes sense at a gut level not to reward people who have been involved in wrongdoing, the reality is that doing so offers one of the most effective tools to date in rooting out fraud and saving the government’s money. Sarbanes-Oxley’s whistleblower laws have allowed the SEC to target the high-level actors by enticing those who are at a lower level of responsibility with a financial reward.
If you have inside information about SEC violations and would like to speak with a Sarbanes-Oxley lawyer, contact us today to set up an appointment. We have the knowledge and experience you need to provide you with the maximum protection and reward.