Lawmakers have been known to rush in order to push through legislation because of partisan concerns. It’s argued that might have been the case with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), passed by Congress in 2010 after 2008’s financial crash and its associated offenses. While some see problems with Dodd-Frank, one of the sets of provisions that have been working well are the ones concerning whistleblowers. Tips by whistleblowers have risen enormously since Dodd-Frank went into effect, because the set of laws made it easier for those caught in the middle of a scam to report wrongdoing while upping the amount a whistleblower could collect if the case they brought was successful.
The Financial CHOICE Act of 2017 was recently passed by the U.S. House of Representatives. If passed by the Senate and approved by the President, it would amend Dodd-Frank’s provisions by:
- Repealing restrictions on some types of banks’ speculative investments (the Volcker Rule)
- Eliminating the liquidation authority of the Federal Deposit Insurance Corporation (FDIC) specifically with regard to failing banks
- Allowing some banks to exempt themselves from certain regulations if they maintain capitalization ratios and other requirements
- Changing provisions that involve civil penalties for securities law violations.
The last point is especially worrisome for potential whistleblowers. The Financial CHOICE Act would limit protections for whistleblowers and restrict incentives for those who shoulder the risks inherent in stepping forward and speaking up.
How does this New Act Affect Whistleblowers?
Some provisions of the CHOICE Act aim to prevent corporate whistleblowers from collecting any awards if they were involved in the wrongdoing. That might seem right on its surface, unless you’ve ever worked for a company or a boss who pressured you to skirt ethical choices. Sometimes employees become ensnared in wrongdoing because they don’t have a lot of choice in the matter.
The new Act would also compel a whistleblower to attempt to stop the misconduct inside the company before they report it to the authorities or bring a case. Often, this requirement would boil down to forcing an employee to choose between being fired for blowing the whistle inside the company and not reporting anything, thus allowing the fraud to continue. This provision in the CHOICE Act has broad implications because any employee or person who, “having a duty to prevent the violation, fails to make an effort the person is required to make,” cannot bring a case.
The president of the National Whistleblower Center, Michael Kohn, noted that, “If you require an individual to go internally, they know they are putting their financial livelihood and their careers on the line, and they won’t go.” The Act would have a chilling effect on whistleblowers.
If It Ain’t Broke?
Dodd-Frank was passed a number of years ago, with whistleblower tips soaring—and that’s nothing but good. Various government oversight agencies simply do not have enough time or personnel power to unearth even a small fraction of fraud and rely upon civilians to step forward with information. In a 2015 speech, Mary Jo White, former chair of the Securities and Exchange Commission (SEC), said, “We have seen enough to know that whistleblowers increase our efficiency and conserve our scarce resources.”
Dodd-Frank strengthened provisions for whistleblowers and upped their rewards, and deservedly so. Since the first payment was made in 2011, $154 million has been awarded to whistleblowers by the SEC. But the new CHOICE Act might well reduce the numbers of whistleblowers willing to stick their necks out. In the long run, that’s not good for our country. Calling out thieves and fraudsters saves taxpayers money while serving as a warning to those who would try to get away with ill-gotten gains.
Rooting out and pursuing wrongdoing doesn’t come cheap. Bad rulemaking and lax enforcement will only open up a golden path for the next offender.
Making a difference
If you think you have the facts needed to bring a whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the government will intervene, or join in your lawsuit.
Your chances of succeeding are greater if your whistleblower claim is substantive, clear, and to the point. Because of this, meeting with a qualified whistleblower attorney can increase your chances of winning. The Louthian Law Firm can help you form your claim so that the government will be more inclined to intervene in your case; government intervention can sometimes increase the chances of recovering reward money. Even if the government decides not to intervene, it could still be a good idea to pursue your case without government involvement. Our strong support system can assist you through every step of the process.
For a free, confidential evaluation of your case, call the Louthian Law Firm today at 1-803-454-1200 or, if you prefer, you can fill out our online contact form.