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Dodd-Frank/FCPA FAQ

What is the Dodd-Frank Act?
What is the Foreign Corrupt Practices Act (FCPA)?
Who is a Whistleblower?
What Does Original Information Entail?
What are Monetary Sanctions?
What is Considered a Voluntary Submission?
What Type of Award Can a Whistleblower Receive for His/Her Information?
Who Does NOT Qualify to Receive an Award as a Whistleblower?
How Does One Stay Anonymous Through the Filing Procedure?

What is the Dodd-Frank Act?  

The Dodd-Frank Act, known formally as the Dodd-Frank Wall Street Reform and Consumer Protection Act, was signed into law July 21, 2010 and is a major piece of reform legislation covering commodities and securities actions worldwide.  The Act is meant primarily to promote financial stability by improving accountability and transparency in the financial system. (Top)

What is the Foreign Corrupt Practices Act (FCPA)?

The FCPA makes it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.  The FCPA also requires many corporations to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls. (Top)

Who is a Whistleblower?

Section 15 U.S.C. § 78u-6(a)(6) of the Dodd-Frank Act defines "whistleblower" as "any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission [SEC], in a manner established, by rule or regulation, by the Commission [SEC]." (Top)

What Does Original Information Entail?

The term "original information," as defined in Section 15 U.S.C. § 78u-6(a)(3) of the Dodd-Frank Act, means "information that is derived from the independent knowledge or analysis of a whistleblower; is not known to the Commission [SEC] from any other source, unless the whistleblower is the original source of the information; and is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information. (Top)

What are Monetary Sanctions?

Section 15 U.S.C. § 78u-6(a)(4) of the Dodd-Frank Act defines "monetary sanctions" as "any monies, including penalties, disgorgement, and interest, ordered to be paid; and any monies deposited into a disgorgement fund or other fund pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such action or any settlement of such action." (Top)

What is Considered a Voluntary Submission?

Section 17 CFR §240.21F-4 of the SEC final rules and regulations defines a submission as voluntary, if provided "before a request, inquiry, or demand that relates to the subject matter of your submission is directed to you or anyone representing you (such as an attorney) by the Commission [SEC]; in connection with an investigation, inspection, or examination by the Public Company Accounting Oversight Board, or any self-regulatory organization; or in connection with an investigation by Congress, any other authority of the federal government, or a state Attorney General or securities regulatory authority...In addition, [a] submission will not be considered voluntary if [the whistleblower] is required to report the original information to the Commission [SEC] as a result of a pre-existing legal duty, a contractual duty that is owed to the Commission [SEC] or to one of the other authorities [listed above] or a duty that arises out of a judicial or administrative order." (Top)

What Type of Award Can a Whistleblower Receive for His/Her Information?

15 U.S.C. § 78u-6(b)(1) of the Dodd-Frank Act gives the SEC the power to give whistleblowers who provide original information that leads to a successful SEC enforcement, 10% to 30% of the monetary sanctions over $1 million. (Top)

Who Does NOT Qualify to Receive an Award as a Whistleblower?

Section 15 U.S.C. § 78u-6(c)(2) of the Dodd-Frank Act excludes from the Dodd-Frank award provision: "[A] Any whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the Commission [SEC], a member, officer, or employee of an appropriate regulatory agency; the Department of Justice; a self-regulatory organization; the Public Accounting Oversight Board; or a law enforcement organization.  [B] Any whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award under this section.  [C] Any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of section 10A of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1).  [D] Any whistleblower who fails to submit information to the Commission [SEC] in such form as the Commission [SEC] may, by rule, require."

NOTE: Section 17 CFR § 240.21F-8(c) of the SEC final rules and regulations contains additional disqualifications, including a disqualification of employees of foreign governments.  The National Whistleblowers Center (NWC) believes that these exclusions go beyond the statute and opposed them during the rule making proceedings.  Click Here to view the NWC's letter to the SEC.  In an appropriate case we will consider filing a claim on behalf of a foreign government employee and file a judicial challenge to this SEC rule. (Top)

How Does One Stay Anonymous Through the Filing Procedure?

Section 15 U.S.C. § 78u-6(d)(2) of the Dodd-Frank Act reads as follows:

 "Any whistleblower who anonymously makes a claim for an award...shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is based.  Prior to the payment of an award, a whistleblower shall disclose the identity of the whistleblower and provide other information as the Commission [SEC] may require, directly or through counsel for the whistleblower."

Section 17 CFR § 240.21F-9(c) of the SEC final rules and regulations also contains their own rule of anonymity that reads very similarly to Section 15 U.S.C. § 78u-6(d)(2) of the Dodd-Frank Act as mentioned above. (Top)