Huge Awards Expected for Whistleblowers in 2014, SEC says

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Large awards are awaiting whistleblowers this year, say officials from the Securities and Exchange Commission. One large award has already been given, and officials promise that more large rewards are on the way. Experts who closely follow the whistleblower issues have the same prediction. George Canellos, former Securities and Exchange Commission co-chief of enforcement, said last September that “There are a good number of cases that are going to involve awards to whistleblowers in the many millions of dollars each,”

These predictions, along with other signs, strongly indicate that 2014 is going to be a year with bigger bounties for whistleblowers. SEC officials also expect that tips from whistleblowers will continue to grow.

The Justice Department secured $3.8 billion in settlements and judgments through the False Claims Act in the fiscal year for 2013, the Wall Street Journal reports. These settlements were largely based on cases filed by whistleblowers in the past. According to data from the U.S. Justice Department, a record high number of qui tam whistleblower actions have been filed in the past two years. With the number of qui tam actions on the rise, experts predict that authorities have enough evidence to collect more in settlements and judgments.

The False Claims Act is intended to catch companies who defraud the American government. Under the qui tam provision of the False Claims Act, individuals who are not associated with the government have a right to file an action on behalf of the government when they witness wrongdoing. These individuals, known as “whistleblowers” receive a portion of the funds recovered by the government. Generally, they receive about 15 to 25 percent, which often amounts to many millions for the whistleblower.

Whistleblowers are also protected from any actions a company may take to retaliate. SEC whistleblower chief Sean McKessy says that going after such companies is a priority for the agency. Employers who try to take action against whistleblowing employees could be faced with a cease-and-desist order or a monetary sanction.

There is still some ongoing debate about who counts as a whistleblower. Last year, the fifth circuit appeals court ruled that whistleblowers had to report the suspected wrongdoing to the SEC in order to be protected. Lower courts have ruled differently, however. Experts say that companies will try and find ways to have internal whistleblowing. The issue of whistleblowing can often be confusing, and sound legal is advice is needed to make the best decision. Parker Waichman LLP, a national law firm with years of experience in multiple practice areas, offers free legal advice for any potential whistleblowers. For more information, fill out the form to the right or call 1(800) LAW-INFO.