There's a New Watchdog on Wall Street - Whistleblowers Poised to Reap Huge Benefits
Lawyers across the nation have been getting calls from brokers, investment advisors and other financial professionals about fraud and securities law violations by their employers, competitors, or others in the industry. The reason for this surge of interest in “blowing the whistle” on securities violations is that the Dodd-Frank Financial Reform Act, which went into effect in July, has created a financial rewards program that could pay a large sum of any person who provides “original information” to the SEC that leads to a successful enforcement action relating to the violation of federal securities laws. While investors and members of the public are allowed to participate in the program, it stands to reason that those who are most likely to have access to “original information” about illegal activity by investment firms would typically be industry insiders, which also explains why they are calling lawyers instead of running directly to the SEC.
By having a lawyer, an industry with sensitive information can protect his or her identity by allowing the lawyer to funnel the information to the regulators and do their bidding when it comes to negotiating the reward, which under the new Act will range between 10% and 30% of the amount recovered by the SEC. Given that recent SEC fines have been in the hundreds of millions of dollars, there is plenty of money to be made by both the whistleblower and the lawyers, who typically handle such case on a contingent fee or percentage basis. The new law allows whistleblowers represented by lawyers to present their information and claims anonymously, and it also contains legal prohibitions against industry retaliation as well as the right to sue any employer in the industry who retaliates against a whistleblower.
There are a number of law firms that have long focused on the representation of whistleblowers, but most of those firms have little experience in the financial industry. Many of these lawyers have worked with IRS under a similar whistleblower rewards program to deal with tax cheats, and there is a False Claims Act that allows citizens to sue federal contractors who have cheated the government. Now that a whistleblower program is in place for the financial industry, law firms who are experienced at representing whistleblowers outside the industry are forming strategic alliances with firms that are experienced at handling securities fraud claims. According to Craig T. Jones, a partner in the law firm of Page Perry LLC, “our firm has many decades of combined experience representing investors and other participants in the securities industry, and we look forward to working with lawyers who represent whistleblowers in dealing with the SEC.”
“Anyone connected with the securities industry who thinks they might qualify should investigate their legal options,” says Jones. “We are very interested in talking with potential whistleblowers, as well as any lawyers who already represent them, to develop a strategy that maximizes both the legal protection and financial recovery afforded to the client. These cases lend themselves to a team approach since there are few lawyers who singularly possess all of the knowledge and skills necessary to represent whistleblowers while also being familiar with the securities industry, and the potential rewards are substantial enough to allow fee splitting between lawyers at no added cost to the client.” Jones’ firm, Page Perry, is based in Atlanta but represents investors all over the country in claims against investment firms.
