The Frank Dodd Act Protects And Rewards Whistleblowers

An individual, who reports on his or her boss's illegal activities in an attempt to put a stop to it, is known as a whistleblower. Whistleblowers play an important part in making sure that business is conducted fairly and safely, but their courage in making a stand, can leave them facing harsh consequences. This brings us to the Frank Dodd Act.

Fortunately, there are a growing number of laws designed to protect whistleblowers against retaliation from their employers, and these laws are getting tougher. In 2010 Congress passed the Dodd Frank Act, often mistakenly referred to as the Frank Dodd Act, which is there to offer protection and financial reward to whistleblowers. The law is applicable to those who pass on information to the Securities and Exchange Commission (SEC) relating to the breaking of federal securities law.

What is the Frank Dodd Act?

The act was introduced by President Obama on the suggestion of republican Barney Frank and Senator Chris Dodd, following the financial disaster of 2008 that placed the blame firmly at the door of the banks and other financial institutions. The main aim of the law was to reduce the level of dependence upon the banking world by taking a firmer grip on the reigns of the financial institutions. This involved making them more accountable by subjecting them to a myriad of rules and regulations as well as breaking up the “big boys” who were deemed too big for their boots. Banks are now required to have “funeral plans” in place to enable them to effect a quick close down process, should they get into financial trouble, thus avoiding the need for a taxpayer bail out. The President also realised that he needed to get everyone on board and accordingly encouraged individuals within financial institutions to act as the eyes and ears for the government by sniffing out any illegal activities and reporting them directly to the SEC and rewarding them if a case was successfully proven.

Frank Dodd Act - Violations

There are a plethora of SEC and CFTC (Commodity Futures Trading Commission Act) violations that are contained under this Act. These include:

  • bribing foreign officials
  • failing to file reports
  • insider trading
  • manipulating stock prices
  • Ponzi schemes
  • theft or misappropriation of funds
  • false or misleading statements

Retaliation and reprisal

Under the rulings of the Frank Dodd act it is forbidden for an employer to retaliate against an employee who has passed on information to the SEC, provided that person firmly believes that a possible violation of the securities act may have taken place.

It is illegal for an employer who is faced with a whistleblower in his employ to do any of the following, regardless of whether or not a case has been filed:

  • fire the employee
  • demote the employee's position
  • ignore him for promotion even though he could be the ideal candidate
  • harass him
  • threaten in any way

Should the employer carry out any of the above actions, then the whistleblower is likely to have recourse and can sue his employer directly for damages including loss of earnings, reputation, and stress and trauma caused to both himself and his family.

Monetary gain

The law also entices more whistleblowers to come forward to the SEC with original information concerning securities law violations by offering them a financial incentive of up to 30% of the total amount of the funds recovered. In some cases this amount can add up to millions of dollars, so you can see that the possible reward could be a life changing sum of money.

Since the Frank Dodd Act was passed in 2010, there has been a steady increase in the level of whistleblower lawsuits. This seems to indicate that more employees, who may have been scared to stand up before, are now prepared to blow the whistle without fear of losing their jobs, knowing that the law is on their side.

If you suspect that your boss is violating the federal securities law, then don't just keep it to yourself. Contact an experienced attorney who can discuss your case and help you every step of the way.