Would-Be New York Whistleblowers: Your Patience May Be Rewarded

Big paydays could be coming soon.
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If you’ve got some dirt on your employer and you live in New York, you might want to keep it under your hat until the state green lights Attorney General Eric Schneiderman’s plan to make ratting out much, much more lucrative in the Empire State. That is, unless you’re barred from doing so by your company’s general counsel or a nondisclosure agreement. Then you might want to wait until the SEC gets around to banning that practice again.

Like the federal programs, the New York program would give tipsters awards of between 10% and 30% of the amount of penalties recovered if their information leads to an state enforcement action with sanctions of more than $1 million. The legislation would also protect financial-services tipsters from retaliation….

Federal authorities have often been limited in the amount they can offer whistleblowers in bank cases, as there is a $1.6 million cap on whistleblower payouts under the law the Justice Department has used to bring many recent bank cases.

Dodd-Frank regulations prohibit companies from interfering with employees reporting potential securities-law violations to the agency….

The agency has asked the firms to turn over every nondisclosure agreement, confidentiality agreement, severance agreement and settlement agreement they entered into with employees since Dodd-Frank went into effect, as well as documents related to corporate training on confidentiality, according to the letter and the people familiar with the matter. The agency letter viewed by the Journal also asked for “all documents that refer or relate to whistleblowing” and a list of terminated employees.

New York Attorney General to Propose New Whistleblower Bounty Program [WSJ Risk & Compliance Journal blog]
SEC Probes Companies’ Treatment of Whistleblowers [WSJ]

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