Part of Julie Pace’s job as a Phoenix attorney is to train clients on how to deal with the whistle-blower provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The law calls for financial awards to people who give the federal Securities and Exchange Commission information that leads to sanctions of more than $1 million against a company.
The award is between 10 and 30 percent of the total amount collected. The law also allows whistle-blowers to report fraud anonymously and prevents employers from retaliating against them.
Before Dodd-Frank, whistle-blower complaints were related largely to matters such as harassment and discrimination, according to Pace, who works for The Cavanagh Law Firm in Phoenix. Now, they include securities violations such as insider trading or irregularities in commodities trading. Companies need to adapt their policies accordingly, she said.
Perhaps more important, she said, employees should know how to go about making their complaints within the company. A hotline can be helpful in accomplishing that.
The guidelines should also make it clear who will investigate the complaint, including whether it will be an internal or external investigation. The plan should include a procedure for drafting a report and taking appropriate action.
Pace has handled one case so far related to the new whistle-blower provisions. The employee who lodged it didn’t realize the connection to Dodd-Frank, but the company did and responded accordingly. The complaint turned out to be based on a misunderstanding and was resolved quickly, she said.
She predicted the number of complaints will increase, especially as employees become more savvy about the new provisions.
The law, combined with last year’s Fiesta Bowl ticket scandal, has led to a perhaps more surprising development in Phoenix, she said. About 10 nonprofit agencies have requested assistance in drafting formal ethics codes of conduct.
The trend seems to be toward being squeaky clean when it comes to company finances and related matters, such as trips and gifts, she said.