Dodd-Frank Whistleblowers

Our New York whistleblower attorneys provide first-tier representation in Dodd-Frank whistleblower claims. With in-depth knowledge of the securities industry, from 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 have knowledge about 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 received nearly 4,000 whistleblower tips in 2015 and paid more than $37 million to reward whistleblowers. 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 primarily workplace health 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 to these whistleblowers in certain circumstances, but provides no monetary incentives, creating a stick but no carrot situation.

Internal Revenue Code 7623 (a) and (b)

The IRS Whistleblower statute provides for whistleblowers who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects. Internal Revenue Code 26 U.S.C.S. § 7623.


Significant representations for Whistleblowers
  • Recovered $2 Million for a Whistleblowing trader against former employer in FINRA arbitration

  • Well-known financial analyst in the CDO market at the Department of Labor under Sarbanes Oxley for refusal to certify analyst report as edited by brokerage firm issuer and receives $500,000

  • Rating agency whistleblower under Sarbanes Oxley relating to the 2008 financial crisis pay-to-play ratings in Federal court case in Southern District NY

  • Institutional broker relating to currency trading manipulation involving major international inter-dealer broker-dealer under Dodd Frank

  • Credit Union whistleblower in blowing the whistle on fraudulent use of credit union assets under federal credit union act and federal deposit Insurance Corporation

  • Whistleblower in 10(b)- 5 fraud case against major international brokerage firm relating to PR Close-End bond funds

  • Whistleblower in claim under Dodd-Frank relating to issuer fraud involving complex structure easing product

  • Whistleblower in SEC asset collection acting agent previously sanctioned individual under Dodd-Frank

  • Whistleblower in Dodd-Frank international Ponzi scheme case

Attorney Advertisement. Prior results do not guarantee a similar outcome.

Client Reviews
Jenice and her staff are all excellent - highly responsive, answer as many questions as you have in a way that you can understand, are very patient, sympathetic to your situation, and make you feel comfortable during a difficult and stressful time. I never once had to follow up - they always came to me to keep me updated by phone and mail. I highly recommend them.
★★★★★
I worked with Jenice and her team to successfully resolve a brokerage / securities related issue for an elder relative and was quite pleased with how they walked us through the process and took into account the challenges that age sometimes unfortunately present. They were all professional - and effective. I would use them again without question if the need arose. Bart
★★★★★
Jenice is truly a rock star! My wife and I contacted her to help with a quick-turn-around closing on our apartment. Fast, friendly, and fabulously informed about the process and what we'd need to stay on track to close on time, Jenice never skipped a beat. She's a dedicated attorney that goes above and beyond for her clients. Honestly, what more could you ask for? Jerry Dugan
★★★★★
Ms. Malecki defended a commercial litigation case for my client, and did a very professional job. Her motion practice was direct and she was honest with the client regarding the merits of the various issues involved. She was professionally courteous but also held her ground with opposing counsel as required. Her billing estimates were accurate as well, which was greatly appreciated in order to make appropriate business decisions. Commercial Real Estate client
★★★★★