We work with whistleblowers to expose fraud against the government.

SEC & CFTC Fraud

Dodd-Frank rules govern Wall Street whistleblowers.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 created whistleblower programs in both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) that authorize cash rewards to whistleblowers who voluntarily provide those agencies with information leading to the successful prosecution of violations of securities and commodities laws.

Under the Dodd-Frank Act, the SEC and CFTC are required to pay whistleblowers cash rewards of 10 to 30 percent of any monetary sanctions in excess of $1 million that the government, as a result of the whistleblowers’ assistance, recovers through either civil or criminal proceedings. In order to qualify for such rewards, whistleblowers must provide the SEC with “original information”:

  • Derived from independent knowledge or analysis of a whistleblower
  • Not known to the agency from any other source
  • Not exclusively derived from:
    • allegations made in a judicial or administrative hearing,
    • governmental report,
    • hearing,
    • audit,
    • investigation, or
    • news media.

The Dodd-Frank Act gives the agencies wide discretion to determine the specific dollar amount of any cash reward within the 10 to 30 percent range by considering, among other factors:

  • Significance of information provided by whistleblower
  • Degree of assistance provided by whistleblower
  • Programmatic interest of the agency in deterring violations of the relevant securities and commodities laws

Unlike qui tam claims filed under the Federal False Claims Act (FCA), SEC and CFTC whistleblower claims do not involve the filing of a suit against the party who has committed the fraud. Rather, the whistleblower typically hires an attorney to:

  • Research the transactions in question
  • Hire and advance the costs of experts in finance, accounting, or securities regulation
  • Prepare forms and disclosures to be filed with the SEC or CFTC Whistleblower Office
  • Interface between the SEC or CFTC Whistleblower Office, the whistleblower, and the expert witnesses for the duration of the investigation, which may require several years to conclude

Dodd-Frank whistleblower claims can be filed anonymously, but only if the whistleblower acts through an attorney. In addition to permitting anonymous filings, which itself offers significant protection for the whistleblower, the Dodd-Frank Act provides several robust whistleblower protection provisions, including three additional whistleblower retaliation causes of action and enhancements to the retaliation provisions of the Sarbanes-Oxley Act and False Claims Act.

The types of securities and commodities violations that may be presented to the SEC and CFTC are as varied and complex as the financial, securities, and commodity markets themselves. Areas of SEC interest include:

  • Insider trading
  • Market manipulation
  • Ponzi schemes
  • Financial reporting in violation of standards established by the Financial Accounting Standards Board
  • Violations of the Foreign Corrupt Practices Act (FCPA)

The CFTC’s primary area of interest is trading in agricultural, energy and metals commodity futures and options.

In selecting counsel to pursue a security or commodity whistleblower claim, an important consideration may be the financial resources available to the whistleblower’s counsel to retain the very best experts in the fields of finance, accounting, and securities regulation to substantiate the whistleblower’s claims before the SEC or CTFC. As a mid-size national plaintiffs’ firm with extensive resources at our command, Waters Kraus & Paul routinely works with expert witnesses in many different fields. We do not hesitate to retain the services of the best experts in their fields required to bring cases to successful resolution.

What is Qui Tam?

Under the Federal False Claims Act (FCA), whistleblowers have the power to save taxpayers billions of dollars each year by taking a stand against fraud. The U.S. False Claims Act allows private citizens to file suits on the government’s behalf when the government has been defrauded through any federally funded contract or program. The qui tam provisions of the False Claims Act allow these citizens to recover damages. A number of states and the city of Chicago also have laws similar to the False Claims Act to protect against fraud. To learn more about the different types of fraud … READ MORE

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What are my chances?

That’s the first question everyone asks. The truth is it’s impossible to know. But we can tell you this. Waters Kraus & Paul has what it takes to fight against big corporate interests and win. That’s why we’ve taken more mesothelioma trials to verdict than any other firm. And that’s why we’ve recovered more than $1.3 billion for clients like you. Do you think you have a case? Contact us now to speak with an attorney.

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