Foreign Corrupt Practices Act (FCPA)
Frequently Asked Questions
1. Q: What is the Dodd-Frank Act?
A: The Dodd-Frank Act, known formally as the Dodd-Frank Wall Street Reform and Consumer Protection Act, was signed into law July 21, 2010, and is a major piece of reform legislation covering commodities and securities actions worldwide. This Act created strong whistleblower protections and reward provisions in the Securities Exchange Act, Commodities Exchange Act, and the Foreign Corrupt Practices Act.
2. Q: What is the Foreign Corrupt Practices Act (FCPA)?
A: Under the FCPA, United States authorities can enforce prohibitions against bribes paid to foreign officials by foreign nationals outside the United States. The FCPA makes it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. The FCPA also requires many corporations to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.
3. Q: Who is a Whistleblower?
A: A "whistleblower" is "any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation" of the Securities Exchange Act, Commodities Exchange Act, and/or the Foreign Corrupt Practices Act. Reward claims must be filed in accordance with the rules established by the United States government. There are some narrow exceptions that primarily apply to persons that work for the government. For example, employees of the United States Department of Justice typically cannot apply for a reward.
4. Q: Can non-U.S. citizens be whistleblowers?
A: Yes. Non-U.S. citizens are permitted to file reward claims confidentially and anonymously and are fully qualified for monetary rewards. Between 2011 and 2014, well over 1,000 foreign nationals have filed reward claims and over $30 million USD have been paid to whistleblowers who are not United States citizens.
5. Q: Can corporations or Non-Governmental Organizations (NGOs) qualify as whistleblowers?
A: Under the Securities Exchange Act, Commodities Exchange Act, and the Foreign Corrupt Practices Act, "analysts" can qualify as whistleblowers. An "analyst" can be an employee of an NGO who collects information from sources about bribery or other sources of corruption and files a claim. In addition, an employee of a corporation can file a claim against another corporation if they believe their competitor is engaged in illegal activities. For example, when a corporation obtains a government contract through bribery for which the "analysts" company should have obtained the grant.
6. Q: What is the technical definition of "original information?"
A: The term "original information," in the Securities Exchange Act, Commodities Exchange Act, and the Foreign Corrupt Practices Act, means "information that is derived from the independent knowledge or analysis of a whistleblower; is not known to the Commission [SEC] from any other source, unless the whistleblower is the original source of the information; and is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.
7. Q: What type of award can a whistleblower obtain for his/her information?
A: Under the Securities Exchange Act, Commodities Exchange Act, and the Foreign Corrupt Practices Act, the United States government is required to give a qualified whistleblower who provided original information that leads to a successful enforcement, 10% to 30% of the monetary sanctions recovered. However, the total sanction must be over $1 million USD.
8. Q: What are "monetary sanctions?"
A: Under the Securities Exchange Act, Commodities Exchange Act, and the Foreign Corrupt Practices Act, "monetary sanctions" are "any monies, including penalties, disgorgement, and interest, ordered to be paid" as a result of any legal or administrative enforcement action of a case between the United States government and the persons and/or corporations who violated the applicable laws.
9. Q: Who does NOT qualify to receive an award as a whistleblower?
A: Only a narrow class of persons are disqualified from obtaining a reward. The Dodd-Frank Act excludes the following persons from obtaining an award:
"[A] Any whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the Commission [SEC], a member, officer, or employee of an appropriate regulatory agency; the Department of Justice; a self-regulatory organization; the Public Accounting Oversight Board; or a law enforcement organization. [B] Any whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award under this section. [C] Any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of section 10A of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1). [D] Any whistleblower who fails to submit information to the Commission [SEC] in such form as the Commission [SEC] may, by rule, require."
NOTE: Section 17 CFR § 240.21F-8(c) of the SEC final rules and regulations contains additional disqualifications, including a disqualification of employees of foreign governments. We believe that these exclusions go beyond the statute and may not be enforceable.
10. Q: Can I obtain a reward if I participated in the underlying fraud?
A: Yes. However, if you planned and initiated the fraud, restrictions may apply.
11. Q: Does applying for a reward result in amnesty from prosecution?
A: No. However, it is extremely rare for whistleblowers to be prosecuted based on the information they provided. The whistleblowers are generally considered important whitnesseses for the United States government.
12. Q: Can I file a claim confidentially in the United States?
A: Yes, but you MUST obtain legal counsel in order to ensure that your filings will remain confidential to the fullest extent of the law.
13. Q: Can I file a claim anonymously so that that United States government is not informed of my identity?
A: Yes. However, the law requires that you obtain an attorney who is licensed in the United States in order to file an anonymous claim. The actual law that permits you to file an anonymous claim is as follows:
"Any whistleblower who anonymously makes a claim for an award...shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is based. Prior to the payment of an award, a whistleblower shall disclose the identity of the whistleblower and provide other information as the Commission [SEC] may require, directly or through counsel for the whistleblower."
Section 17 CFR § 240.21F-9(c) of the SEC final rules and regulations also contains their own rule of anonymity that reads very similarly to Section 15 U.S.C. § 78u-6(d)(2) of the Dodd-Frank Act as mentioned above.
14. Q: What are my odds that my claim will be successful?
A: There are no guarantees. Many claims are denied in their entirety. Under America's oldest reward law, the average claim paid to a whistleblower is approximately $1.5 million USD. The largest individual reward was $104 million USD that was paid to a former Swiss banker, Bradley Birkenfeld.
15. Q: How do I obtain legal assistance?
A: In order to provide information to one of our attorney's, all we ask is that you fill out our online confidential consultation form. After this form is submitted, it typically takes approximately 5-10 business days for our attorney's to respond. At this time we may set-up a meeting that may take place in person, over the phone, or on Skype. If we are unable to help you with your case, we will do our best to refer you to another attorney who we believe may be better suited to help you with your claim.
16. Q: Where can I get information about my rights as a whistleblower?
A: The best single source of information is "The Whistleblowers Handbook: A Step-By-Step Guide To Doing What’s Right and Protecting Yourself." It contains twenty-one rules for whistleblowers and detailed information on all of the whistleblower reward laws. Additionally, the resources page is a free library of information regarding whistleblower laws. It includes links to the regulations, statutes, legislative history, and information on how to contact major regulatory bodies such as the Securities and Exchange Commission.