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The Whistleblower Program under the Dodd-Frank and the Foreign Corrupt Practices Act

Section 922 of the Dodd-Frank Act - The Whistleblower Program

The Securities and Exchange Commission ("SEC") whistleblower program created under section 922 of the Dodd-Frank Act incentivizes those with knowledge of securities violations to "blow the whistle" on the person or company engaging in such conduct. To initiate a suit, the whistleblower must complete and file a Form TCR (i.e., a Tip, Complaint or Referral Form), available on the SEC website detailing the violations and providing evidence and facts. If the SEC recovers money using the information the whistle blower provided, the whistleblower may apply for an award and stands to recover a portion of the money.

The Foreign Corrupt Practices Act

The anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) make it unlawful to make a payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person.   The statute defines foreign official as "any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization . . . ."  In other words, the FCPA includes in the definition of foreign official," officers and employees of government instrumentalities."  While the FCPA does not define "instrumentality," the Department of Justice ("DOJ") and the SEC have construed "instrumentalities" broadly. The ability of the SEC and the DOJ to enforce the FCPA only extends to American companies and citizens who bribe foreign officials.

The Whistleblower Program under the Dodd-Frank Act and the Foreign Corrupt Practices Act

Because the SEC  whistleblower program under the Dodd-Frank Act offers rewards for helping the government uncover securities violations, including violations of the FCPA, American companies who operate in foreign countries are coming under increased scrutiny. American companies operating in the health care industry are particularly at risk because many conduct business in foreign countries with national healthcare systems that are run by the government and operated by government employees. The DOJ and the SEC interpret these government employees as "foreign officials" under the FCPA. Thus, when an American company offers these healthcare providers incentives for prescribing and ordering their medications, they risk violating the FCPA.

New settlements and awards related to the whistleblower program under Dodd-Frank for FCPA violations are emerging, indicating an increased use of the Acts, and necessitating an increased awareness of them.

Contact Us To Learn More

We invite you to learn more from our Whistleblowers, Qui Tam & False Claims Act Practice Group. For more information or to schedule a confidential discussion about a potential case, please fill out the form on the right. You can also call us at (215) 875-4699.

For further reading:
SEC Prepare for Whistleblower Payouts under Dodd-Frank Act
SEC Whistleblower Statute: Section 922 of the Dodd-Frank Act
What is the False Claims Act?
What is Qui Tam Law?

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