After the infamous 2008 economic crisis, the corporate world was in another crisis, corporate scandals. These scandals affected how investors perceived the industry. Due to the continuous cases of corporate scandals, there was a massive withdrawal of financial support from a section of investors around the country. Due to the complexity of the scandals, the law enforcement agencies could do nothing about the developments.
The only option according to pundits was to encourage whistle blowers by providing a legal protection, which unfortunately was not available prior to 2010. In order to protect corporate America from any further dent on its credibility, Dodd-Frank Wall Street (Reform and Consumer Protection Act) was designed by lawmaking body; Congress. The legislation gave SEC whistleblower attorneys a legal point of view when representing a whistle blower.
How did the legislation empower the whistleblower?
Prior to the legislation, the existing laws did not protect a whistle blower. Whistle blowing was a recipe for all kind of corporate intimidation. However, the whistle blower can now report any corporate fraud without worrying about the future of their employment. In addition, the legislation protects them from any possible intimidations, which was common before the legislation or fear a demotion, or in the worse scenario suffer a suspension.
The legislation gives the whistle blower the legal ability to report any incident of scandal, which must be done in accordance with the existing SEC guidelines. They have the ability (in accordance with legislation) to provide evidence through testifying against their seniors without intimidation. These guidelines have been the number one cause of reductions in corporate scandals for the last eight years.
The legislation interpretation of monetary rewards
The law has four main pillars on monetary rewards. It is important to understand that monetary awards are specifically included this legislation as an encouragement to report fraud instances but not the only reason. In order to qualify for monetary rewards, the whistle blower, in this case, must provide information in depth that in return can be admissible in a legal proceeding. The information provided by the whistle blower must also meet the threshold of a possible interference of the set code of ethics. Finally, the information provided must also provide sufficient reasons to initiate (monetary) sanctions to the suspected individuals.
In addition, the whistle blower, in this case, must be having information unknown to anybody. This requirement rules out any information in the hands of SEC. Any pieces of information already in front of a judicial hearing are also not considered for any monetary consideration since it does not qualify as origination information. The SEC guidelines also outlaw any information, which is dated prior July 21, of the year 2010.
How does one become a whistle blower?
The SEC in the 2010 legislation provided the guideline on how one can be a whistle blower. The SEC has a functional portal where one can file the complaint. The information must meet all the above guidelines. The SEC requires that the whistle blower to only give truthful information only. The SEC gives the person filing the complaint a chance to use their attorney or do so with anonymous status.