Whistleblowers play a leading role in exposing illegal activity and holding companies accountable for fraud. In recognition of the importance of whistleblowers, key laws offer qui tam relators – individuals who provide the government with information about misconduct and fraud – an opportunity to receive monetary reward. Under many of these whistleblower laws, relators are entitled to a significant percentage of funds recovered by the government.
Not all misconduct is covered by whistleblower reward law. Each law defines scope of covered misconduct, the type of individual who may be eligible for a reward, and mandatory procedures for reporting. Qualifying for and receiving a reward under these laws requires a careful understanding of, and adherence to, these rules.
Employees who blow the whistle often risk retaliation for coming forward with information. Certain laws listed below offer attorney-represented relators protection in the form of the ability to file their claims anonymously. Additionally, many of the laws provide legal remedies for employees who face retaliation for blowing the whistle.
Whistleblower Award Programs
The federal government oversees a number of whistleblower reward programs. The following is a non-exhaustive list of the laws that establish these programs and offer a pathway for eligible whistleblowers to receive a reward.
False Claims Act
The False Claims Act aims to prevent the wrongful acquisition of government funds. Eligible whistleblowers who come forward with information related to such an abuse are entitled to receive between 15% and 25% of the proceeds if the government intervenes. If the government does not intervene, the whistleblower may pursue the claim without government assistance. If the whistleblower brings the action themself and wins, they are entitled to between 25% and 30% of the proceeds. Many states have additional false claims acts that prohibit fraud against the state government. These can be enforced through qui tam lawsuits.
SEC Awards
The SEC Whistleblower Incentive Program rewards eligible whistleblowers who come forward with original and timely information regarding violations of securities laws. Created in 2010 to improve the SEC’s whistleblower efforts, the Program expanded both the type of information that can qualify for an award and the amount of monetary award that may be paid to eligible whistleblowers. Under the Program, whistleblowers who voluntarily provide original information leading to over $1 million in sanctions are eligible for 10% to 30% of the amount collected. The calculation of a reward may include sanctions imposed through “related actions” brought by specified authorities other than the SEC.
CFTC Awards
Created in 2010 as an amendment to the Commodities Exchange Act, the CFTC Whistleblower Program rewards eligible whistleblowers who voluntarily provide original information regarding regulatory violations within the CFTC’s jurisdiction. Eligible whistleblowers are entitled to between 10% and 30% of the amount collected in monetary sanctions through successful administrative or judicial action. To be eligible for a reward, whistleblowers must follow the CFTC’s filing requirements and the resulting sanction must be greater than $1 million.
IRS Awards
Congress amended the Internal Revenue Code in 2006 to include a whistleblower reward program. Eligible whistleblowers who provide information regarding tax fraud or tax underpayment are entitled to between 15% and 30% of the amount collected as a result of administrative or judicial action. Common forms of fraud or underpayment include underreporting of income, overstating of deductions, hiding of assets, false recordkeeping, keeping multiple sets of books, misusing trusts, stock fraud, or improperly shifting assets offshore to avoid tax. In 2019, Congress strengthened protections for IRS whistleblowers by adding explicit anti-retaliation provisions prohibiting employers from retaliating against employees who report tax violations.
Anti-Money Laundering Act
The Anti-Money Laundering Act of 2020 created a reward program for eligible whistleblowers who voluntarily provide original information about anti-money laundering law violations. The Anti-Money Whistleblower Improvement Act of 2022 strengthened the existing program. If an eligible whistleblower’s information leads to monetary sanction greater than $1 million, they are now entitled to between 10% and 30% of the amount collected. Company compliance and audit professionals are no longer automatically excluded from the reward program’s coverage. Whistleblowers are not required to be U.S. citizens to be eligible for the reward program.
Contact Us
Experienced lawyers at Katz Banks Kumin have a proud history of navigating reward programs for whistleblower clients, and the tips we and our clients have submitted have resulted in several successful enforcement actions. Regardless of the type of whistleblower case, we tenaciously fight for the best results for our clients.
If you have information you would like to provide to the government – or if you have provided such information to the government or your employer and were retaliated against as a result – contact our experienced whistleblower attorneys. Your communications with us are confidential and without charge or further obligation.