Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

This week, the FBI released a public service announcement by actor Michael Douglas encouraging the public to report financial fraud. On its face this sounds like a good thing. However, the FBI left out some key information, namely other avenues of reporting that are likely better for whistleblowers.

There are robust financial incentives for filing a claim with the Securities Exchange Commission (SEC), the Internal Revenue Service (IRS), and the Commodity Futures Trading Commission. NWC General Counsel David Colapinto told the Washington Post if a whistleblower goes “to the FBI, they are probably going to get zero. The FBI’s not obligated to do anything for them.” The FBI’s rewards would be solely at the discretion of the Department of Justice. This is scary. Just take a look at how they treat their own whistleblowers.

As pointed out by the Huffington Post, the financial crisis has put financial fraud on more people’s radar. The SEC has seen an increase in securities fraud reports, despite the fact that nearly 70 percent of Americans are unaware of the SEC’s whistleblower program (see recent report by Labaton Sucharow).

If the FBI is truly interested in encouraging people to come forward and protecting those who do, they should not hide the ball. Give workers information about all their rights, including the much more robust financial reward programs at the SEC, IRS and the CFTC.

We always tell whistleblowers who contact us that is in their best interest to know their rights before they blow the whistle. Make sure you educate yourself and consult an attorney before you blow the whistle.

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The Commodities Future Trading Commission (CFTC) has proposed a series of regulations to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. Members of the public are invited to comment on the proposed whistleblower regulations until February 4, 2011.

We can expect a replay of the conflict generated by the rulemaking of the Securities and Exchange Commission (SEC). Industry representatives wanted the SEC to establish exclusions, limits, reductions and hurdles for whistleblower rewards. They wanted to regulate the fees of whistleblower attorneys and threaten those attorneys with sanctions. You can read our prior blog posts about this controversy here and here. The National Whistleblowers Center prepared a report showing that whistleblower rewards encouraged the detection of fraud and did not hinder internal compliance programs. We also submitted comments on the SEC regulations. Hopefully, the CFTC will not be swayed by the SEC's proposed rules, and will take a fresh look at what regulations will actually encourage employees to come forward with information to assist in the detection of frauds and other violations.

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