November 16, 2017

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By Gary L. Azorsky and Raymond M. Sarola

In the wake of the financial crisis a decade ago, policymakers faced a stark reality concerning fraud in the financial sector: To prevent future crises, people on the front lines must be willing to come forward and report fraudulent activity. Indeed, the crisis showed that the entire financial services industry must be more vigilant in preventing widespread fraud.

In response, Congress established the Securities and Exchange Commission whistle-blower program as part of the Dodd-Frank Act. The program acknowledges that Wall Street itself must be an important part of any effort to make our laws and regulations more effective, provide restitution to victims and prevent fraud. Accordingly, this program is of particular importance to employees and institutions in New York City and other major financial centers.

For many, doing the right thing and reporting fraudulent activity can seem like a risky endeavor. But it doesn’t have to be. In recent years, the SEC has paid out over $150 million to whistle-blowers who provided information that assisted successful enforcement actions, all while keeping their identities strictly confidential. And yet, the SEC program and the various protections in place for whistle-blowers remain unknown and underutilized by many on Wall Street. Here are three reasons to keep this program in mind when you begin to suspect a company is violating federal securities laws:

The SEC whistle-blower program is relatively young and the pace with which it acts on tips has steadily increased over time. It issued over $57 million in awards in 2016, which exceeded the cumulative awards issued prior to last year. Ultimately, the success of this vital program depends upon individuals who learn of securities fraud and report it to the government. The SEC is doing everything in its power to make doing so both simple and rewarding for financial professionals.

The full article can be viewed here.