On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law. The Act provides important provisions for whistleblowers to assist the Securities and Exchange Commission in policing fraud, including monetary incentives and anti-retaliation provisions for reporting violations of the securities laws to the SEC. Milberg LLP, a private law firm that has represented plaintiffs in securities actions for decades, applauds the government’s recognition of the risks whistleblowers face and the value they provide in fighting fraud.
“In representing confidential witnesses and whistleblowers, Milberg has seen first hand how powerful corporations silence individuals who have dared to do the right thing. This legislation will play an important step in protecting people who refuse to remain silent in the face of wrongdoing,” said Sanford Dumain, Chair of Milberg’s Executive Committee.
Under the Act, the SEC must pay a whistleblower 10% to 30% of SEC sanctions in excess of $1 million. To receive payment, the whistleblower must voluntarily provide the SEC with information, unknown to the SEC, and derived from the whistleblower’s independent knowledge or analysis. The SEC must also pay if the information leads to enforcement actions by other governmental organizations, including the U.S. Department of Justice, another federal agency, a self-regulatory organization, or a state attorney general. The SEC will pay whistleblowers who may have been securities law violators themselves, unless they are criminally convicted. Whistleblowers may be eligible for cooperation agreements that may limit their civil liability. The Act’s whistleblower provisions are immediately effective, but the Act gives the SEC 270 days to create rules to aid in their implementation.
The Act protects whistleblowers by creating a federal private right against employer retaliation. The Act further protects whistleblowers by allowing them to present the information and claim incentive payments anonymously, by acting through counsel, until right before the incentive payment in sought.
Milberg’s decades of experience prosecuting thousands of class actions and its record recoveries of over $55 billion make it well suited to represent whistleblowers who want to be represented before the SEC. Milberg has successfully represented whistleblowers in other contexts, including in “qui tam” actions, involving the prosecution of fraud against the federal government pursuant to the False Claims Act. Milberg possesses significant resources to assist in presenting whistleblower cases to the SEC, including a team of attorneys which includes former government and agency lawyers. Milberg’s team of in-house investigators, including former FBI and other law enforcement agents, and in-house forensic accountants, have significant experience working with confidential witnesses and whistleblowers. “Speaking with confidential witnesses and whistleblowers is something we do every day. Knowing how to treat these people with the proper respect and discretion has always been key to Milberg’s success,” said Steven Bursey, head of Milberg’s investigative team and retired FBI veteran.
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