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A Whistleblower’s Guide to the Dodd-Frank Act
Thursday, April 4, 2024

The Dodd-Frank Act of 2010 was passed in the fallout of the Great Recession in order to reform Wall Street and better stabilize the entire financial system. Keys provisions relate to whistleblowers, giving them new avenues to report misconduct related to securities and other issues within financial firms, providing substantial whistleblower awards for doing so, and protecting them from workplace retaliation for taking action. 

Becoming a whistleblower under the Dodd-Frank Act, Consumer Protection Act, and Securities Exchange Act is a serious decision. Here is what you need to know.

The Broad Reach of the Dodd-Frank Act

The goal of the Dodd-Frank Act was to protect the U.S. economy from the sorts of misconduct that led to the financial crisis. Because of the breadth of that misconduct, the Act impacts numerous sectors of the financial system in the U.S., including the Federal Deposit Insurance Corporation, and allows whistleblowers to bring forward evidence of:

  • Corruption or bribery involving foreign officials or foreign banks
  • Securities fraud leading to systemic risk
  • Insider trading
  • Investment fraud 
  • Accounting fraud involving mortgage lenders, mortgage brokers, or other financial entities
  • Commodities fraud or violations of the Commodity Exchange Act (CEA)
  • Money laundering within financial institutions

These disclosures can be made to either the U.S. Securities and Exchange Commission (SEC), the Department of Justice (DOJ), or the Commodity Futures Trade Commission (CFTC), depending on the allegations being made.

The Process for Blowing the Whistle Under the Dodd-Frank Act

If you have evidence of a type of financial misconduct covered by the Dodd-Frank Act and are considering becoming a whistleblower, you need to know what you are about to get yourself into. While the exact procedure will depend on which agency or federal reserve board you report to, the general process remains the same.

First, you would have discovered what appears to be evidence of misconduct, looked into it further, found that your suspicions were confirmed and then decided to become a whistleblower. While you do not necessarily need to be a company insider, the information that you provide must include something that is not publicly known.

At this point, the best thing to do is to hire an experienced whistleblower lawyer. The process for disclosing the information to law enforcement is complicated, but it is your preliminary investigation that benefits the most from an attorney’s help. You will have probably never conducted a similar investigation before, and are unlikely to know for sure how to go about it. That uncertainty can be costly. Not only are you likely to spend more time searching for evidence that you can use; you are also far more likely to make a mistake that shows your intention of becoming a whistleblower. If you get found out, you will likely lose your access to the incriminating information and could even face disciplinary action from financial companies if the whistleblower protections have not been triggered yet.

What follows is your preliminary investigation. This is when you gather as much evidence that you can about the misconduct at the heart of your claim. This can take anywhere from a week to multiple years.

Once you have enough evidence to strongly support your claims, you would submit a tip to the appropriate federal agency. Most tips under the Dodd-Frank Act go to the CFTC or the SEC, both of which have their own tip portal. If you want to file your tip anonymously, then you are required to have an attorney (15 U.S.C. § 78u-6(d)(2)).

The agency will then look further into the allegations that you are making, using the evidence that you provided to search for more. During this time, your confidentiality will be maintained. However, it is not uncommon for the target of the investigation to figure out who the whistleblower was based on other circumstantial evidence. At this point, though, the Dodd-Frank Act’s workplace protections will have been triggered.

Unlike with many other forms of whistleblower claims, this is the end of the road for claims that advance under the Dodd-Frank Act. If the agency chooses not to pursue your case any further, you do not have the option of filing a qui tam lawsuit on behalf of the government. This makes it extremely important to conduct a thorough and full preliminary investigation that presents as strong of a case as possible to the agency.

If they do pursue the case and obtain a settlement, you can then apply for your share of it through the agency’s whistleblower reward program.

The Act’s Workplace Protections for Whistleblowers

The Dodd-Frank Act includes a provision that protects whistleblowers from retaliation (15 U.S.C. § 78u-6(h)). That retaliation can take the form of:

  • Discharge or termination
  • Demotion
  • Suspension
  • Harassment
  • Discrimination, whether directly or indirectly
  • Threatening to take any of these actions

These employment actions are considered retaliation if they happen because you:

  • Brought evidence of illegality on hedge funds or misconduct to law enforcement under the Act
  • Testified or assisted in an SEC investigation
  • Disclosed other information as required by law

If you are retaliated against, the Dodd-Frank regulations gives you the right to file a lawsuit – generally one for wrongful termination. Unlike other wrongful termination claims, which recover the full amount of your back wages, Dodd-Frank whistleblower retaliation claims can recover:

  • Twice the amount of your back wages, plus interest on the amount
  • Attorneys’ fees
  • Court costs
  • Reinstatement or front pay 

These protections are designed to persuade more whistleblowers to come forward and deter employers from retaliating against them when they do. 

The Whistleblower Rewards Program

While the Dodd-Frank Act does not reward whistleblowers, it requires the Securities and Exchange Commission, CFTC, and the DOJ to provide financial rewards to whistleblowers who voluntarily disclose information that leads to successful enforcement actions. Each agency’s award program is slightly different, though they all provide whistleblowers with a 10 to 30 percent share in the proceeds of the case.

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