An SEC whistleblower program mandated as part of the Dodd-Frank financial regulation passed in 2010 is expected to disburse the first payments to whistleblowers in the near future. The formal whistleblower process incentivizes reporting of corporate wrongdoing by compensating those who come forward with 10% to 30% of the penalties ultimately levied against the company. The program also includes protections for employees against retaliatory action taken by employers in connection with participation in the SEC whistleblower program. In its annual report, the SEC has tracked the program’s efficacy during the first seven weeks, reporting that the Commission received 334 calls about securities fraud in 37 states and even abroad. The swell of information is particularly useful for those types of securities fraud that are difficult for regulators to detect, such as financial statement fraud and lack of disclosure.

The success of the SEC whistleblower program mirrors the success of other federal whistleblower laws, particularly the False Claims Act (“FCA”). The FCA is a federal qui tam statute which creates a private cause of action for whistleblowers to sue on behalf of the government for alleged false claims made in connection with payment or evasion of liability. Between 1986 and 2009, qui tam suits under the FCA have recovered over $15 billion, with whistleblowers (also known as relators)  receiving rewards of approximately $2.5 billion. Although the government may elect to intervene in a qui tam suit filed under the FCA, it does not always do so, and relators may bring their claims even if the federal government does not participate in the litigation. Like the SEC program, too, the FCA includes protections for employees against retaliation. Any employee who suffers an adverse employment action as a result of efforts to stop violations of the FCA may pursue a variety of remedies, including reinstatement to one’s prior employment, double back pay with interest, and special damages. Under the FCA, whistleblowers may receive 15% to 30% of any settlement or final judgment.


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