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Whistleblowers & PE

by Jordan A. Thomas

September 06, 2011

Potential whistleblowers have been newly incentivised to report possible violations, and will receive previously unheard of levels of protection for doing so

Jordan Thomas, partner at Labaton Sucharow, says many GPs don't appreciate the significant impact the whistleblower provisions in Dodd-Frank will have on their businesses and what they can do to address them. 

Under Dodd-Frank the US Securities and Exchange Commission (SEC) is required to pay cash awards to whistleblowers who voluntarily supply the SEC with original information leading to a judicial or administrative action in which the SEC obtains monetary sanctions over $1 million, subject to certain limitations. 

Whistleblowers who provide such information are eligible for a cash award of from 10 to 30 percent of the monetary sanctions. Employers are prohibited from retaliating against individuals who provide the SEC with information about possible federal securities law violations, and victims of retaliation are granted an independent cause of action. In addition, whistleblowers may report anonymously if they are represented by counsel. In other words, potential whistleblowers have been newly incentivised to report possible violations, and will receive previously unheard of levels of protection for doing so. 

The goal of the new whistleblower regulations is to generate high quality tips that the SEC would not otherwise receive from individuals with original information about securities law violations by providing them with new and significant protections and incentives. 


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