FRAUD AND SOCIETY
ARTICLE SUMMARY 9
This is an article summary of CRYING FOUL: WHISTLEBLOWER PROVISIONS OF THE DODD-FRANK ACT OF 2010, Umang Desai, Loyola University Chicago Law Journal, 2011, 43 Loy. U. Chi. L.J. 427.
This Article examines how the Dodd-Frank Act, would encourage whistleblower participation in the promotion of corporate governance in an attempt to restore integrity in the corporate world and the financial markets after the wave of the several of the major fraudulent scandals. The provisions of the Act, are more likely to increase the financial burden on both corporations and the government, but however it has some consequences that could greatly diminish the positive ...view middle of the document...
Based on their ability to uncover fraud and provide investor security, the public have received whistleblowers positively despite of the negative treatment being meted to them.
Congress passed the 1934 Act to regulate the secondary securities markets, creating the SEC, a federal administrative agency developed to oversee these markets. The 1934 Act was one of Congress's first attempts at regulating corporate governance from within the corporation through the creation of whistleblower provisions. The Whistleblower regulations saw little improvement until 1986 when Congress amended the FCA, and it dramatically changed the structure of whistleblower incentives. Much like its predecessors, SOX was enacted as a reaction to events that ravaged the financial markets. The courts' varying interpretations of SOX created discrepancies in its application, making it unfairly arbitrary. These deficiencies greatly diminished the success of SOX's whistleblower provisions. Congress's most recent attempt to improve the ineffective whistleblower provisions in prior legislation followed the 2008 financial crisis led to the enactment of the Dodd-Frank Act.
The Dodd-Frank Act amended the definition of whistleblower to include four specific requirements. 1. An individual must “voluntarily furnish original information resulting in a successful enforcement action.” 2. An individual is one or more persons or corporations who come forward with original information. 3. The information in question must be given voluntarily and free from external pressure. 4. In addition, the information uncovered cannot include discoveries made in the course of employment or an individual's employment responsibilities. The law also emphases that auditors and other individuals with regulatory positions cannot bring claims as whistleblowers. The Dodd-Frank Act facilitates of Whistleblower Participation through the Bounty Program. It also increases awareness and reduces the tolerance of corporate fraud. Bounty Program's awards whistleblowers to between ten and thirty percent of a...