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SEC Whistleblower

Our New York whistleblower attorneys provide first-tier representation in Dodd-Frank whistleblower claims. With in-depth knowledge of the securities industry, from the inside out, we will get your matter noticed. We represent a number of anonymous whistleblowers, including Dodd-Frank whistleblowers, in active and closed investigations involving millions of dollars in bounties, who tipped off the SEC with original information leading to and assisting large SEC investigations. We often sit down at the table with the SEC, the DOJ and the US Attorney’s office on whistleblower matters.

Throughout American history, it has often taken the courage of whistleblowers, to call out covertly illegal business practices. In July 2010, the United States government passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. This reform aims for increased public watch and censure of misconduct in state and national economic affairs. Dodd-Frank takes precise strides to protect the whistleblowers within the finance industry, as well as compensate anyone who believes that they know of wrongdoing, regardless of whether they worked for or with the company or not. Even rumors, if they can be substantiated, could generate a whistleblowing award, up to 30% of a total recovery greater than $1,000,000. Dodd-Frank further admonishes employers who mistreat, threaten, or otherwise persecute whistleblowers offering information to any regulatory action against said employers or their colleagues. Whistleblowers can remain anonymous.

The SEC has awarded almost $425 million to almost 80 different whistleblowers since the time it started issuing whistleblower awards back in 2012. As the public awareness of whistleblower rewards and awards spread more substantial tips and claims have been reported. The Office of the Whistleblower (OWB) has also continued its efforts to make whistleblowers feel safe and the anti-retaliatory protection encourages individuals to come forward.

Our New York whistleblower lawyers help prepare statements and ensure that whistleblowers are ably represented when addressing the regulators at hand. One of the most important features of Dodd-Frank is the award system for whistleblowers who provide original information and the anti-retaliatory provision. They need skilled representation otherwise they might risk waiving away their rights to claim the award.

We have a substantial background advocating for clients in whistleblower filings and litigation, including retaliation claims. Before the collapse of the housing market, in the wake of the Sarbanes-Oxley Act, and prior to and after the Dodd-Frank Act, Ms. Malecki represented multiple whistleblowers, including Arturo Cifuentes and Eric Kolchinsky amongst others.

We combine our industry knowledge of securities law and employment litigation to provide first-tier representation for defendants and plaintiffs in whistleblower claims.

Various Statutes Available to Whistleblowers:

Whistleblowers often have varied reasons to call attention to actions they believe are violative of state or federal laws. Whether for non-monetary or monetary reasons, these individuals may be protected by the anti-retaliatory provisions of New York Labor Law § 740 (“Section 740”), the Sarbanes-Oxley Act of 2002 (“SOX”), Internal Revenue Code 26 U.S.C.S. § 7623 (b) and possibly the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Though often described as a “whistleblower law,” Section 740 provides protection from retaliation for blowing the whistle but does not provide any incentives. New York has a separate False Claims Act, and the Tax Department provides separate incentives for informing of potentially illegal conduct. SOX provides both incentives as well as retaliatory protection, as does Dodd-Frank.

Dodd-Frank

Dodd-Frank was enacted after the “Great Recession” that spanned 2007 through 2009 and the substantial “bailouts” received from banking entities that were termed “too big to fail.” Dodd-Frank provides rewards for individuals who provide “original information” to the SEC Office of the Whistleblower, DOJ or Commodities Futures Trading Commission relating to violations of the securities laws, Foreign Corrupt Practices Act or commodities laws.

For more information on the current state of Dodd-Frank reform click here.

Federal False Claims Act

The oldest statute under which whistleblowers have been able to obtain an award is the Federal False Claims Act, first established in 1863 and significantly amended in 1986 to provide for more streamlined processing and more generous awards, among other changes. Under the current regime, individuals with “original information” called “relators” must first inform their local U.S. Attorney General of the eminent filing of their qui tam action, which they then file under seal in U.S. Federal District Court. If the U.S. Attorney decides to join the action on behalf of the U.S. Government, they are termed to have intervened, and will then prosecute the action. If they choose not to, the relator may prosecute the action on their own. The False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733.

New York has a statutory False Claims Act, N.Y. Financial Law §§ 187-194, which operates similarly to the Federal False Claims Act, imposing liability on any person who (1) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval to a state, (2) knowingly makes, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the state, or (3) conspires to defraud the state by getting a false claim allowed or paid. New York’s False Claims Act has been significantly limited to issues of workplace health, primarily, and health care more generally (Medicaid fraud, etc.).

SOX

SOX was enacted into law in 2002 after the very public corporate frauds involving Enron, WorldCom, and Tyco in an effort to protect investors and the markets that rely on accurate accounting to establish proper valuations. One of the most public events that predated SOX was the failure of Enron, where Arthur Andersen (one of the “big five” accounting firms at the time) helped perpetrate wide-spread fraud and was found guilty for criminal charges of crimes that were only realized upon Enron’s collapse.

SOX changed the corporate landscape by establishing, among other things, obligations on behalf of individuals with knowledge (including attorneys) to report up and report out to the U.S. Government accounting violations by publicly traded companies and certain other entities and individuals, who work for such companies. In exchange, SOX provides protection for these whistleblowers in certain circumstances, but provides no monetary incentives, creating a stick but no carrot situation.

Internal Revenue Code 7623 (a) and (b)

Under section 7623(b) of the IRS Code, whistleblowers can be awarded between 15% and 30% (with a few exceptions) as an award in any case they provide original information on in which more than $2,000,000 are in dispute. There are no limits to how much an individual may collect. Subsection (a) addressed situations that do not qualify under (b). Cases handled under subsection (a) do not require that an award be issued, nor do they contain a statutory minimum percentage for any award. Awards under subsection (a) are handled at the discretion of the Internal Revenue Service. Under the IRC, the IRS does not pay awards until after all of the subject’s appeal rights have been exhausted which may take years.


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Client Reviews
★★★★★
Jenice Malecki, is one of the most helpful individuals Ive had the pleasure of speaking with. She is super knowledgeable. She helped me navigate the ever changing world of securities law. You will find her understanding of complex matters helpful and insightful. She is straightforward and candid. She makes your options easy to understand. I would recommend her without any hesitation. 10/5 stars! Enrique Tiburcio
★★★★★
I highly recommend Jenice and her team for any securities matters. She is a true professional and a pleasure to work with. She responds quickly to emails and listens to your concerns/questions. Jenice makes sure you're always informed and in the know about your case. Great experience and also very fairly priced! Jeff
★★★★★
An excellent professional who represented us in trial regarding a bank fraud, an unexpected and difficult time. A professional that worked hard, persevering and who stood toe to toe against firms that had a team of excellent lawyers backing them up. Her unflinching determination really stands out, it makes you feel you have someone who really cares about trying to recover what you lost from the people that wronged you. Salomon Levi
★★★★★
It is difficult to thank you in words when gratitude comes from the heart, so I will try to link feelings with writing. It is essential for us to mention your excellence as a professional, your aptitude on legal fields, and your unavoidable persistence. All of these virtues that elevate the profession you exercise in such an admirable way, go hand in hand with your sense of ethics, your human warmth and the transparency in your actions. To sum up, thank you for being a listening ear and for having the right word while transmitting information about the legal process. Having you as our representative during such an adverse situation was a privilege and enough reason for our eternal gratitude. Angeles Aparain
★★★★★
To say that my securities litigation was complex would be a severe understatement. With multiple parties involved and spanning many years, trying to understand the issues was daunting to say the least. Jenice and her team broke down the transactions by segment and by party uncovering every hidden expense. In the end, I was more than happy and could not thank Jenice and her team enough. I would not hesitate to recommend Jenice to anyone. She is highly professional, incredibly knowledgeable, well connected to industry experts, has a tireless work ethic and is so pleasant and easy to communicate with. Five stars for sure! Andrew Loughrane