Dodd-Frank Act Provides Rewards for Whistleblowers Who Report FCPA Violations
By Morgan J. Miller, Sara A. Murphy & Russell D. Johnson
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and its sweeping financial regulatory reforms. Included among the provisions is a new whistleblower program which provides substantial cash rewards for whistleblowers who voluntarily provide information to the Securities and Exchange Commission (SEC) leading to the successful prosecution of securities law violations. Whistleblowers who report securities violations, including violations of the Foreign Corrupt Practices Act (FCPA), that result in monetary sanctions greater than $1 million, may receive between 10 and 30 percent of the total recovery. The record penalties reported in several recent FCPA matters create significant financial incentives to report violations. In this year alone, there have been three settlements of FCPA-related matters exceeding $300 million each. Potential whistleblower disclosures to the SEC pose a particular and significant impact on companies subject to the FCPA given the sustained regulatory focus on anti-corruption compliance and controls, the pressure to self-report potential violations to government authorities, and the dramatic increase in the number of prosecutions.