Financial Services Fraud
Litigation of Financial Services Fraud Cases
SEC and CFTC Whistleblower Programs
The Dodd-Frank Act, formally known as the Wall Street Reform and Consumer Protection Act, is a major US financial regulatory law that created whistleblower reward programs at the Securities and Exchange Commission and at the Commody Futures Trading Commission.
Under the Act, this reward program is for eligible SEC/CFTC whistleblowers who provide original information that leads to successful SEC/CFTC enforcement actions with total monetary sanctions exceeding $1 million.
Violations can include the following areas:
Under the Rules of these Whistleblower Programs, whistleblowers have the ability to report anonymously if represented by an attorney.
They also offer protection against retaliation.
Anti-Money Laundering Whistleblower Program
The Anti-Money Laundering (AML) Whistleblower Program is a program established by the United States government to encourage individuals with knowledge of potential violations of the Bank Secrecy Act (BSA) and AML laws to come forward and report such violations to the authorities. The program provides incentives and protections for whistleblowers who provide valuable information leading to successful enforcement actions against individuals or entities involved in money laundering or other financial crimes.
The AML Whistleblower Program was created as part of the Anti-Money Laundering Act of 2020 (AMLA), which was enacted to strengthen AML laws and improve the detection and prevention of money laundering and terrorist financing activities. The program is administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Under the AML Whistleblower Program, individuals who submit original information that leads to enforcement actions resulting in monetary sanctions exceeding $1 million may be eligible to receive a monetary award. The amount of the award can range from 1 to 30 percent of the monetary sanctions collected by the government in the case. To protect whistleblowers, the program includes provisions to prevent retaliation against those who report violations.
Foreign Corrupt Practices Act (FCPA)
The Foreign Corrupt Practices Act (FCPA) is a United States federal law enacted in 1977 with the primary aim of preventing bribery and corrupt practices in international business transactions. The FCPA was established to address concerns about U.S. companies engaging in bribery and corruption while conducting business abroad.
The key provisions of the Foreign Corrupt Practices Act include:
Anti-Bribery Provisions: The FCPA prohibits U.S. individuals, companies, and certain foreign entities from offering or providing anything of value, directly or indirectly, to foreign officials to obtain or retain business or gain an improper advantage. This includes bribes, kickbacks, or other illicit payments.
Accounting Provisions: The FCPA also requires companies registered with the U.S. Securities and Exchange Commission (SEC) to maintain accurate and transparent books, records, and internal controls. This provision aims to prevent the use of off-the-books accounts or false records to conceal corrupt payments.
Jurisdiction: The FCPA has an expansive jurisdiction, applying not only to companies and individuals based in the United States but also to foreign entities and individuals who take actions related to corrupt practices within the U.S. territory.
Penalties: Violations of the FCPA can result in significant civil and criminal penalties. Companies found in violation of the FCPA may face fines, disgorgement of ill-gotten gains, and other legal consequences. Individuals convicted of violating the FCPA may face fines and imprisonment.
Exception: The FCPA does have a limited exception known as the "grease payments" exception. This allows for small facilitation or expediting payments to foreign officials to perform routine government actions, such as obtaining permits or processing paperwork. However, these payments must be legal in the foreign country and cannot be used to gain an improper advantage.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted in 2010, the U.S. Securities and Exchange Commission (SEC) was given the authority to establish a whistleblower program for violations of various securities laws, including the anti-bribery provisions of the FCPA. Through this program, individuals who provide original information about potential violations of the FCPA can be eligible for monetary rewards if their tips lead to successful enforcement actions resulting in sanctions exceeding $1 million.
Whistleblowers are protected from retaliation under both the FCPA and the Dodd-Frank Act. If an employer retaliates against a whistleblower for reporting FCPA violations or for participating in an SEC investigation, the whistleblower can take legal action against the employer.