AAJ: Whistleblowers Essential Check on Corporate Fraud

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For Immediate Release: December 16, 2010

Contact: Jamie Hammon
American Association for Justice
202-965-3500 x8369
AAJ Press Room

AAJ: Whistleblowers Essential Check on Corporate Fraud

 

AAJ supports provisions in Dodd-Frank Act that award and protect individuals who inform SEC of fraud

 

Washington, DC—Provisions in the new financial reform law to compensate and protect whistleblowers that inform the Securities and Exchange Commission (SEC) of alleged corporate fraud should remain and be made stronger, according to comments submitted today by the American Association for Justice (AAJ).

 

The comments are in response to the SEC’s Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934. Under the Dodd-Frank Act, whistleblowers would be awarded a portion of the money the SEC recovers as a result of the information.

 

“Giving private citizens incentives to expose corporate fraud – and protection when they do so – is an important check on a system that has for too long let companies police themselves,” AAJ President Gibson Vance said. “Instead of trying to kill this provision and stifle whistleblower information, corporations should instead be concerned with remaining compliant with securities laws and not committing financial fraud.”

 

In its submitted comments, AAJ proposes the SEC further strengthen these provisions by reevaluating the standards whistleblowers are asked to meet. The current proposal requires proof that tips “significantly contributed” to the fraud resolution, and would disqualify those tips that SEC staff could have obtained “in the normal course of the investigation.” The SEC should “reward any whistleblower providing assistance with original information leading to a successful enforcement or related action,” AAJ’s comments state.

For a copy of the comments, please contact Jamie Hammon: jamie.hammon@justice.org.

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