COVID-19 Update: How we are serving and protecting our clients.

Whistleblower Litigation (Dodd Frank Act and Qui Tam Actions)

Lax & Neville LLP represents individuals, also referred to as “whistleblowers” or “relators” who expose violations of securities laws through the U.S. Securities and Exchange Commission (SEC) Whistleblower Program and False Claims Act/Qui Tam actions. A whistleblower or relator can be an employee, independent contractor,  client or any individual who becomes aware of unlawful activities taking place in a business and alerts a government regulatory or enforcement agency like the SEC or the Department of Justice.

Whistleblower Actions Under the Dodd Frank Act

The Securities and Exchange Commission (SEC) protects whistleblowers from retaliation by their employers. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which became effective in July 2010, contains new whistleblower provisions that provide substantial incentives and protection for individuals who voluntarily provide information to the SEC concerning securities law violations. Securities violations that can be reported by whistleblowers to the SEC include the following:

  • Unregistered offer or sale of securities
  • Insider trading
  • Market manipulation
  • Theft or misappropriation of funds or securities
  • Bribery of foreign officials
  • Filing false or misleading SEC reports or financial statements
  • Ponzi schemes
  • Abusive naked short selling
  • Fraudulent conduct associated with municipal securities transactions or public pension plans
  • Other fraudulent conduct

Under the Dodd-Frank Act, employers are prohibited from retaliating against whistleblowers, which means that the employer may not fire, demote, suspend, threaten, harass, or otherwise discriminate against a whistleblower. A whistleblower who suffers from employment retaliation can sue for economic damages, out-of-pocket and litigation costs, attorney fees and equitable relief, such as reinstatement of back pay, overturning a suspension, modifying a performance evaluation, and any other damages incurred.

In 2011, the SEC initiated a ‘whistleblower’ program under the Dodd-Frank Act. The SEC whistleblower program is meant to protect the integrity of the financial markets, provide transparency, and protect the public. The SEC’s whistleblower program is designed to reward individuals who act early to expose violations and who voluntarily provide significant evidence that leads to successful enforcement by the SEC of a federal court or administrative action. In actions which the SEC obtains monetary penalties totaling more than $1 million, the whistleblower receives a portion of that penalty as compensation. By law, the SEC is obligated to withhold the identity of the whistleblower, or any information that could directly or indirectly reveal his or her identity.

If you have information concerning securities law violations, please contact consult our team of experienced attorneys for a consultation about your rights as a potential whistleblower.

False Claims Act/Qui Tam Actions

False Claims Act/Qui Tam actions are civil lawsuits brought under the False Claims Act, which was enacted to encourage individuals to come forward with information and help the U.S. government to stop several types of fraud, including contract fraud, health care fraud, defense contractor fraud and other types of fraud that impact the government financially. Under the False Claims Act, whistleblowers, otherwise referred to as “relators,” may initiate actions against individuals or companies who have committed fraud against the government. The whistleblower/relator may be awarded a portion of any money the government recovers as a result of a successful False Claims Act violation lawsuit, also referred to as a qui tam action.

The False Claims Act has a very comprehensive process for the filing and prosecuting these claims. Under the False Claims Act, the qui tam relator must be represented by an attorney. Additionally, the qui tam lawsuit is filed under seal, which means that the action is kept a secret from everyone except for the government. Filing the complaint under seal gives the Justice Department time to investigate the allegations. If the Justice Department’s investigation uncovers evidence of the misconduct alleged by relator, the Justice Department may impose a civil fine or penalty on the wrongful party. Under the False Claims Act, the whistleblower/relator may be awarded a portion of any money the government recovers as a result of a successful qui tam action. Similar to the Dodd-Frank whistleblower protection, the False Claims Act also provides relators protection against employer retaliation.

Our attorneys have extensive experience regarding the investigation and prosecution of whistleblower SEC actions and Qui Tam actions under the False Claims Act. If you are concerned about an apparent violation of SEC rules or the False Claims Act, you may contact the attorneys of Lax & Neville LLP us for a confidential evaluation of your case.

Featured in
New York Times, BusinessWeek, Dowjones Newswires, CNN Money, Forbes, WSJ, Thomson Reuters & SAC
Contact Us for a Free Consultation
NY: 212-696-1999 / DC: 202-792-0101