Home -> Law Blog Directory -> Qui Tam Blogs -> False Claims Act - Qui Tam

Qui Tam

: False Claims Act - Qui Tam

The SEC and CFTC to vastly expand whistleblower program

By Phillips & Cohen LLP

The Securities and Exchange Commission and the Commodity Futures Trading Commission are working to administer a new whistleblower rule that could provide lottery-sized payouts to informants that provide valuable information in a successful case of securities law violation. A fund of $451 million has already been established for such awards.

While business executives and trade groups have expressed concerns that such substantial payouts could pit employees against their companies and circumvent otherwise-effective internal compliance measures, there are a number of specifications in the current rules to prevent such problems from occurring.

Proponents of the expanded whistleblower program say that the reward encourages people with strong information about illegal activity to come forward, ?particularly in the financial services industry, where people are well compensated and there is more of a culture of silence,? said Erika A. Kelton, a lawyer at Phillips & Cohen, a D.C. firm that specializes in whistleblower law.

The current formulation of the whistleblower rules mandate a payout of 10-30% of any successful action in which penalties exceed $1 million, excluding whistleblowers who were directly involved in the illegal actions or whose job it was within the company to root out fraud, among other restrictions. These rules have not been finalized, and the SEC is currently accepting public comments.

Full post as published by False Claims Act - Qui Tam on November 17, 2010 (boomark / email).