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Reforming Dodd-Frank from the Whistleblower’s Vantage

American Business Law Journal

October 14, 2021

Whistleblowing is a critical component of corporate integrity and economic stability in the United States. It is unsurprising, then, that policy makers and observers have directed considerable attention to the improvement of whistleblower laws. This article assesses potential improvements to the most visible recent addition to the federal whistleblower regime—the Dodd-Frank Act, passed in the wake of the Great Recession to combat securities fraud. The article makes two overarching claims. First, the Securities and Exchange Commission’s (SEC) recently adopted changes to the administrative rules governing the Dodd-Frank whistleblower program (WBP) are incomplete since they were formulated without reference to the experiences of whistleblowers and their counsel. Moreover, at least three of the SEC’s adopted changes will undermine the WBP and should be repealed. Second, the time is right to experiment with improvements to the WBP. If the SEC’s new rules are not the optimal path forward, the question remains what alternative changes should be adopted. To that end, the article utilizes an original qualitative data set consisting of in-depth interviews with two dozen whistleblower counsel, two whistleblowers, a former SEC commissioner, and a former chief of the SEC’s Office of the Whistleblower to propose its own set of changes. Congress and the SEC should embrace these changes to reform Dodd-Frank from the whistleblower’s vantage and to move the WBP closer to its full potential as a deterrent and remedy for securities fraud.


When Darren Sewell died nearly destitute in 2014, he had been a whistleblower and plaintiff in a False Claims Act (FCA) qui tam action for more than five years.1 The E.R. doctor turned health insurance executive had worked extensively with the FBI as it investigated his employer for Medicare fraud. Company executives became aware of the investigation two and a half years after Sewell had filed a complaint under seal, and he soon thereafter submitted his “involuntary resignation.”2 He then found it impossible to obtain work in the Medicare insurance industry and heard that his former employer was telling others to avoid him.3 In desperation, Sewell began to tap his retirement accounts; when he died, little was left for his daughter.4 His lawsuit continued only when the executor of his estate agreed to stand in.5 Seven years after Sewell filed suit and two years after he passed, the U.S. Department of Justice joined the claim; only then did his former employer settle.6 Sewell’s protracted struggle suggests that fraudsters can wield even the passage of time to the decided detriment of whistleblowers and the public alike.

Yet Sewell’s case also illustrates the promise of whistleblowing as an integral element of corporate accountability in the United States and abroad. In recognition of its significance, numerous federal and state statutes have been enacted to protect and encourage those who report corporate misdeeds. Perhaps the most prominent recent addition to the federal whistleblower regime is the program directed by the Securities and Exchange Commission (SEC), created by the Dodd-Frank Act8 to combat securities fraud following the Great Recession—the whistleblower program, or WBP.9 Whistleblowing is especially crucial in the securities context since “[i]n the absence of a whistleblower or luck, most fraud would go undetected.” Despite the law’s development, however, perpetrators continue to commit fraud, and stories of hardship and ruin for whistleblowers like Darren Sewell continue to multiply.

Read Reforming Dodd-Frank from the Whistleblower’s Vantage.