Dodd Frank and the FCPA: The Truth and Consequences

On July 21, 2010, President Obama signed the Dodd Frank Wall Street Reform and Consumer Protection Act (?Dodd Frank? or the ?Act?) into law. Despite its title, Dodd Frank?s mandate goes beyond a comprehensive overhaul of existing financial services regulations. Several of the Act?s core provisions, most notably the ?Securities Whistle-blower Incentives and Protection? provision, will significantly impact the day to day operations of multinational businesses outside of the financial sector. Such impact is especially pronounced in these companies? continuing efforts to comply with the Foreign Corrupt Practices Act (?FCPA?).

Section 922 of Dodd Frank guarantees whistle-blowers a substantial monetary award for providing federal regulators with ?original information? leading to a successful enforcement action. Unsurprisingly, violations of the FCPA are among those offenses that can net potential whistle-blowers a sizable windfall under Dodd Frank. The same section also provides whistleblowers with unprecedented protections against employer retaliation under federal law, including reinstatement, receipt of double back pay, and entitlement to litigation costs. While some may see this provision as an important tool in the fight against corporate crime, companies should be very concerned about the potential for abuse. Turning employees into ?bounty hunters? is not going to help the government, and certainly it will not help promote business interests.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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