The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) of 2010 introduced the most sweeping financial regulatory reforms made by legislators since the Great Depression. Signed into federal law by President Barack Obama on July 21, 2010, Dodd-Frank’s comprehensive measures were designed, in part, to clean up loopholes and improve the oversight and transparency of financial institutions. The intention: to avert another giant recession like the one that hit the U.S. in 2007-2010.
The stated purpose of Dodd-Frank is “To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”
The Act is comprised of 16 titles that lay the groundwork for removing some government agencies and merging or removing others, boosting oversight of specific institutions that represent a systemic risk to financial stability, amending the Federal Reserve Act, and laying out rules for compensation for financial industry executives, to name just a few of the reforms.
Sometimes even the strictest regulatory oversight or audit isn’t enough to deter fraud, which can remain hidden in complex schemes that might only be uncovered by internal sources. To remedy this, Dodd-Frank established the Securities and Exchange Commission’s (SEC) Office of the Whistleblower – an agency devoted exclusively to investigating whistleblower complaints of misconduct and retaliation.
“Through their knowledge of the circumstances and individuals involved, whistleblowers can help the Commission identify possible fraud and other violations much earlier than might otherwise have been possible,” said Office of the Whistleblower Chief Sean McKessy. “That allows the Commission to minimize the harm to investors, better preserve the integrity of the United States’ capital markets, and more swiftly hold accountable those responsible for unlawful conduct.”
Dodd-Frank authorizes the SEC to provide incentives for potential whistleblowers to report fraud. Whistleblowers whose tips lead to $1 million or more in sanctions are to be awarded no less than 10 percent and no more than 30 percent of the total penalties.
The SEC’s Office of the Whistleblower has been one of Dodd-Frank’s biggest successes. Since its inception in 2011, the SEC’s whistleblower program has paid more than $50 million to 18 whistleblowers, including an award of more than $30 million in 2014 and an award of more than $14 million in 2013.