1. To protect against retaliation from employers
when reporting violations of the law
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2. A person who tells the public or someone in authority
about alleged dishonest or illegal activities
(misconduct) occurring in a government department,
private company, or organization
Alleged misconduct may be classified in many ways;
for example, a violation of a law, rule, regulation
and/or a direct threat to public interest
Examples of reports include fraud, health/safety
violations, and corruption
Allegations can be made:
Internally (for example, to other people within the
accused organization)
Externally (to regulators, law enforcement agencies,
to the media or to groups concerned with the issues).
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3. US Federal False Claims Act (1863) became
law in an attempt to combat fraud by
suppliers to the US Government during the
Civil War
More recent legislation
Sarbanes Oxley-Act of 2002
Dodd-Frank Act of 2010
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4. First passed in 1863 and has been revised a
number of times over the years
Still the case that many whistle-blowers
encounter very negative consequences as a
result of exposing organizational fraud
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7. Section 301: Audit committee must provide
means for recording, tracking, and acting on
anonymously-reported suspicious activities
Section 806: increased protection from retaliation
for employees and law enforcement
Protections extend to employees, contractors,
subcontractors, agents of publicly traded
companies or subsidiaries
Section 1107 protects individuals against
retaliation by imposing fines or the threat of
imprisonment, or both, to an employer or any
person who takes any harmful action against the
individual who blows the whistle
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8. Awards under Sarbanes-Oxley:
Back-pay (plus interest)
Reinstatement to the level of seniority prior
to the dismissal
Other “special” costs such as attorneys’ fees,
etc.
Basically, whatever is necessary to make
individual “whole”
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10. Major provision because:
Provides rewards of 10 percent to 30 percent
of any recovered amount (if that amount is in
excess of $1 million), to a whistle-blower,
who has original information that is
voluntarily given to the SEC
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11. To be considered the information must:
Be sufficient, specific, credible and timely to result in
the SEC starting or extending an investigation
Contribute to the success of an ongoing investigation
Be reported to the internal whistleblower hotline or
legal department of his/her employer before (or at
the same time) it was reported to the SEC.
The award is given to the ORIGINAL provider of the
information and will range from 10-30% of monetary
sanctions in excess of $1 million. The whistleblower
is also protected from retaliation from his or her
employer.
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12. Whistleblower must voluntarily provide the
SEC with information (before being asked for
it) that leads to a successful enforcement fine
by the SEC
Information must be based on the
independent knowledge of the whistleblower
that is not already known to the SEC.
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13. The following individuals would not be considered eligible for awards:
Those who already are required to report their information to the SEC
Attorneys (including in-house counsel) who try to claim awards that rightfully
belong to their clients
Those who obtain their information in a way that violates a state or federal
criminal law
Officials of foreign governments
Internal audit or compliance personnel
Information that CPAs find relating to an engagement of an SEC-reporting client
Those whistleblowers who directed, planned, or initiated the questionable actions
(i.e., wrongdoers will not benefit from blowing the whistle on themselves)
In some cases, internal auditors, public accountants, and compliance personnel could
be considered for awards if:
Disclosure of the issue will prevent injury to the financial interest or property of
the entity or its investors
The entity is engaging in activities meant to impede investigation
“At least 120 days have elapsed since the whistleblower reported the information
to his or her supervisor or the entity’s audit committee, chief legal officer, chief
compliance officer”
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14. Employee may prevail by simply presenting
evidence that any of the above activities
resulted in unfavorable action
If the employee wins, a number of possible
events may occur: reinstatement of position,
payment of lost wages, compensatory
damages, attorney’s fees, etc.
Any claim can be reported to the SEC as well
as under any of the other laws and
regulations subject to the jurisdiction of the
SEC.
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15. This section makes it illegal for anyone to retaliate against an employee
who:
Provided, caused to be provided, or is about to provide or cause to be
provided, to an employer, the newly created Bureau of Consumer
Financial Protection (Bureau), or any other government authority or law
enforcement agency
Information that the employee reasonably believes relates to any
violation of any provision of Title X of the Dodd-Frank Act, which
establishes new consumer financial protections, or any rule, order,
standard or prohibition prescribed or enforced by the Bureau
Testified or will testify in a proceeding resulting from the administration
or enforcement of any provision of Title X
Filed, instituted, or caused to be filed or instituted any proceeding under
any federal consumer financial law
Objected to, or refused to participate in any activity, practice, or
assigned task that the employee reasonably believes to be a violation of
any law, rule, standard, or prohibition subject to the jurisdiction of, or
enforceable, by the Bureau
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