Understanding federal whistleblower laws

On Behalf of | May 1, 2015 | Whistle-blower Claims

The anonymous person who led federal investigators to a “flash crash” trader could collect millions of dollars for the information under the federal whistleblower laws. Under the program created as part of the 2010 Dodd-Frank Wall Street reform movement, informants can collect up to 30 percent of the total sanctions if the government is able to collect at least $1 million as a result of these tips. Those who have information on Wisconsin businesses that have engaged in illegal practices may also be eligible for payment under federal whistleblower laws.

Under the federal Whistleblower Protection Act, those who report illegal activity are protected from prosecution when they provide information that leads to federal indictments. Under the Dodd-Frank reform regulations, the amount of a monetary award is based on the total amount actually collected by the government.

In the case of the flash crash trader, the profit made from illegal trading is estimated at at least $40 million. It is likely that the authorities will pursue at least this amount, so the whistleblower could collect between $4 and $12 million. It is also likely the government will pursue interest and penalties against the investor.

Under the False Claims Act, anyone who defrauds a government program is liable for repayment. In addition, the law includes a qui tam provision, which allows whistleblowers to collect money under the suit against those who defraud the government. Those who are aware of fraud on the part of their employers may benefit from speaking to an employment attorney, who can represent them in their attempt to collect compensation under whistleblower statutes.

Source: Reuters, “UPDATE 1-‘Flash crash’ whistleblower may see multi-million dollar pay day,” Sarah N. Lynch and David Ingram, April 22, 2015


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