What is the Dodd-Frank Act?

The Dodd-Frank Act is a federal law which strengthened protections against fraud and recklessness in our financial industry in the wake of the Great Recession.

Formally known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, this landmark set of regulations enhanced government oversight of our financial markets and created an entirely new set of whistleblower programs and protections for whistleblowers to report unlawful activity to either the U.S. Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Also termed the "Wall Street Tip-Off Law,” the Dodd-Frank Act established protections for whistleblowers to report wrongdoing by their employers or other bad actors without fear of retaliation and with the prospect of substantial financial compensation. As of late 2021, whistleblowers have now been paid more than $1 billion under the Dodd-Frank whistleblower programs – a massive success. The Dodd-Frank Act provides protections, awards and other benefits to whistleblowers.

HAGENS BERMAN’S DODD-FRANK WHISTLEBLOWER VICTORIES

Hagens Berman has an unmatched track record of successfully representing meritorious whistleblowers under the Dodd-Frank Act who have blown the whistle on violations of the Securities Exchange Act and the Commodities Exchange Act and the rules of those respective agencies. The Dodd-Frank Act is often the only vehicle available to our whistleblower clients to safely and intelligently report information about unlawful activity. It’s also typically the only mechanism that allows them to be rewarded financially for doing so.

Among other accomplishments, our SEC and CFTC whistleblower clients have been awarded maximum award amounts under the provisions of the Dodd-Frank Act (including several maximum awards under the SEC program and the first maximum award under the CFTC program); awarded additional payments for related actions also brought by the Department of Justice; and in some cases, awarded for multiple cases brought over time. Along with our whistleblower clients, our firm has worked with SEC and CFTC headquarters and regional offices across the country with great success, as well as the Department of Justice, Federal Bureau of Investigations, Federal Trade Commission and state Attorney’s General.

Most of our cases under the Dodd-Frank Act remain entirely confidential and cannot be referenced at all on our website or otherwise. Some cases, however, have been in the public eye. In 2021 alone, the SEC determined that our clients in three unrelated whistleblower cases were entitled to maximum awards.

In one of the first and most successful SEC whistleblower cases under the Dodd-Frank Act, Hagens Berman represented Wall Street veteran and leading algorithmic trading expert, Haim Bodek, in his complaint against BATS Global Inc./Direct Edge Holdings (the third largest U.S. exchange), challenging the unlawful, preferential treatment it gave certain high-frequency trading companies. This highly technical, ground-breaking case resulted in the largest SEC fine ever imposed on a U.S. financial exchange, as covered by two front-page stories in the Wall Street Journal. Hagens Berman later brought an unrelated whistleblower complaint against the New York Stock Exchange and helped the SEC secure another record-tying judgment against the exchange. The Dodd-Frank Act allowed our client to come forward with original information for the SEC while protecting his interests.

And in the most prominent CFTC whistleblower action since the program began, Hagens Berman represented the anonymous whistleblower who identified a previously undetected cause of the infamous 2010 “Flash Crash,” where a rogue trader in London materially contributed to the largest instantaneous drop in our financial markets to date. This whistleblower action resulted in the first-ever Department of Justice prosecution and guilty plea following extradition of a foreign market manipulator. Again, the Dodd-Frank Act is what protected our whistleblower client and allowed for him to secure a deserved reward. We also successfully represented another CFTC whistleblower client in an action against the largest privately held company in the U.S.

DODD-FRANK WHISTLEBLOWERS AND THE SEC

Though the majority of SEC whistleblowers awarded under the Dodd-Frank Act are insiders reporting on their present or former company, more than 30 percent are outsiders with particular expertise and information helpful to the SEC. Our firm has successfully represented both insider and outsider whistleblowers under the SEC program.

Securities fraud – also known as stock or investment fraud – generally refers to material, false and misleading statements by companies that violate federal securities laws and SEC Rules and that often unlawfully induces investors to purchase or sell stocks or otherwise act on information that is false, resulting in financial losses. Fraud through corporate disclosures and financials remains the most common. Under the Dodd-Frank Act, securities fraud also includes offering fraud, market manipulation, insider trading, trading and pricing fraud, foreign bribery violations of the Foreign Corrupt Practices Act, and other practices running afoul of federal securities regulations and SEC rules. Our firm has successfully handled cases across these areas of securities law as well as highly technical market structure violations involving REG NMS, REG SHO and other specialized areas of securities regulation.

Less than 1% of SEC whistleblower complaints filed under the provisions of Dodd-Frank with the SEC result in a whistleblower award. The overwhelming majority of SEC complaints never even reach the SEC Enforcement Division for investigation. Our firm succeeds for our clients against these odds – the overwhelming majority of our cases are investigated by SEC counsel in the Enforcement Division. This is because, for more than a decade, we’ve developed expertise and experience to know what the SEC is looking for and we are selective about the Dodd-Frank whistleblowers we represent – which works to our clients’ advantage.

We continue to represent several quality whistleblowers under this program through the guidelines set forth in this historic Dodd-Frank Act, and its protections and rewards for whistleblowers.

DODD-FRANK WHISTLEBLOWERS AND THE CFTC

Dodd-Frank whistleblowers play a critical role in helping the CFTC investigate and prosecute violations involving foreign currency trading, commodity futures or option trading on domestic commodity exchanges, and the marketing and handling of commodity investments. Their protections, rewards and ability to step forward are also stipulated under the Dodd-Frank Act.

The CFTC Office of the Whistleblower has continued to actively encourage and support Dodd-Frank whistleblowers under its program. Our firm represents the most well-known – though anonymous – Dodd-Frank CFTC whistleblower under the program, whose whistleblower complaint concerning the “Flash Crash” of 2010 resulted in an unprecedented CFTC and Department of Justice action for manipulation of our futures market and a reward following civil and criminal prosecution. We also represented a successful whistleblower whose information resulted in a large CFTC Enforcement action against the largest private company in the U.S..

As with the SEC, a tiny percentage of CFTC whistleblower complaints filed with the CFTC result in a whistleblower award. The overwhelming majority of the complaints never reach the CFTC Enforcement Division for investigation. Our firm succeeds for our clients against these odds – the overwhelming majority of our whistleblower complaints are investigated by the CFTC Enforcement Division.

We continue to represent several CFTC Dodd-Frank whistleblowers under this program whose claims have brought impressive rewards and charges against defendants.

HAGENS BERMAN REPRESENTS WHISTLEBLOWERS UNDER THE DODD-FRANK ACT

More than ninety-five percent of Dodd-Frank whistleblower complaints filed by whistleblowers with the SEC and CFTC are not acted upon by the respective Enforcement Divisions. We represent the 3% that are – we work to distinguish signals from noise for the government. Which is a big part of why our whistleblower cases have resulted in several rewards to our clients over the past decade.

Some of the Dodd-Frank Act cases that the SEC and CFTC fail to act upon are left to die because they are not well-presented by a law firm with the experience, knowledge, and track record to intelligently investigate and present the allegations. Hagens Berman’s team of expert whistleblower attorneys, led by firm Managing Partner Steve Berman and Head of Whistleblower Practice Shayne Stevenson – a “go-to lawyer” for financial fraud whistleblowers under Dodd-Frank – has the track record, reputation and knowledge to advocate for our whistleblower clients in ways others do not. Unlike the vast majority of whistleblower law firms, Hagens Berman has proven expertise and success and has built an unrivaled reputation with the SEC and CFTC on behalf of our clients.

HOW TO BECOME A DODD-FRANK WHISTLEBLOWER

The Dodd-Frank Act is meant to ensure that America’s financial system is protected against financial fraud and the people who perpetrate it, and this goal cannot be fully accomplished without whistleblowers.

If you have knowledge of federal securities law violations or violations of the Commodities Exchange Act and would like to consider becoming a Dodd-Frank whistleblower and discuss your legal rights and protections, contact our whistleblower team at [email protected] or by filling out the secure form on this page.