Review of SEC’s Report to Congress on the Impact of Dodd-Frank’s Whistleblower Reform, Pt 4

All this week, we have been focusing on whistleblower protections as they pertain to the securities market. Whistleblowers with original information of trading, disclosure or other types of fraud are now able to make reports of misconduct under the new qui tam provisions of the Dodd-Frank Act, which was enacted in 2010 to combat Wall Street transgressions and enhance consumer protection. As such, if you ever encounter possible securities fraud, which could include fraudulent corporate disclosures, insider trading or fraud pertaining to a public pension, you are highly encouraged to make a report to the newly-organized Office of Whistleblower Protection (OWB), which is by the SEC according to the provisions of Dodd-Frank.

In today’s post, we will explore the details of the SEC’s most recent report to Congress on its OWB, particularly with regard to whistleblower awards made during FY 2013.

Process to Recover Whistleblower Awards

In the event the Commission opts to issue a final order or judgment against a securities industry defendant, it will post a Notice of Covered Action on its website, Twitter, and also sends an email alert to GovDelivery. Whistleblowers also may opt to receive emails every time the list of NoCA’s is updated. From there any individual with a whistleblower claim has 90 days from the date of posting to apply for an award. To apply, the individual must submit Form WB-APP, which requires the following information:

• Identification of the applicant and his attorney (if represented);
• Identifying information regarding the original referral (e.g., Complaint Number) and the manner in which it was transferred;
• Information pertaining to any connections you have to the SEC, Department of Justice or similar regulatory agency (e.g., prior employment, employee relatives);
• Origin of the information you submitted;
• Reasons why you are entitled to a whistleblower award.

Review of Whistleblower Claims

Once an application is submitted for a whistleblower award, the OWB reviews the information and prepares a written recommendation as to whether an award is warranted and, if so, the percentage of the award. From there, a member of the Claims Review Staff (CRS) is tasked with reviewing the OWB’s recommendation in light of the requirements of the Dodd Frank Act. The CRS then determines if the award should be allowed and sets forth a proposed percentage amount. In the event a claim is denied, the applicant has 30 days to request areconsideration.