New whistleblower laws in effect now: What you need to know

It just got a lot more lucrative for employees to speak up about any financial funny business they suspect.

Just how lucrative? How about $100,000 —  for starters.

That’s the minimum amount whistleblowers who voluntarily provide original information to the SEC can now expect, thanks to a new law that went into effect Aug. 12.

Here’s what you need to know.

Must meet 4 requirements

The new awards program comes out of the Dodd-Frank Act, the law aimed at reforming the financial industry.

Of course it’s far from easy money. The SEC has high standards for such high rewards. To qualify for the new awards, the whistleblower must meet four criteria:

1. The whistleblower must voluntarily provide info that’s relevant to a possible securities violation. That person must speak up, rather than merely answer questions asked of him or her.
2. The info must be original. That means both based on the whistleblower’s own knowledge (rather than something read or researched) and new to the SEC.
3. The info must lead to successful SEC enforcement. What’s offered up has to further the SEC’s case.
4. Any enforcement action must result in monetary sanctions exceeding $1 million. That includes interest and penalties.

But what if an employee doesn’t go running to the feds, but instead chooses to report suspicions through regular company mechanisms?

That’s not a knock-out factor, according to the new rules.  The final rules offer whistleblowers 120 days credit for info they submit to their employers first.  And there’s a sizable incentive to go to one’s company first … and fast.  Employees who participate in their company’s own compliance program can actually increase the size of their SEC award.

Of course, the rules reiterate that there may be zero retaliation by employers on any individuals who speak up about their concerns, internally or to the SEC.

A plan, even for the squeaky-clean

Hopefully you aren’t too concerned that any employees would have a shred of reportable info on happenings in your company. Still, the new rules offer a reminder that your company should have:

• a clearly spelled out and publicized compliance program
• an anonymous whistleblower mechanism, and
• a policy stating there is no tolerance for retaliation.