Whistleblower Bounties May Encourage Residential Mortgage-Backed Securities Fraud Reporting

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The government is using not only the False Claims Act ( FCA, 31 USC §3729) to fight financial fraud; it has been bringing claims against financial institutions under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), and the Financial Institutions Anti-Fraud Enforcement Act of 1990 (FIAFEA). While DOJ's website invites reporting of RMBS fraud and cites the FCA as a possible remedy, FIRREA may be a more natural fit for these cases, as financial fraud in RMBS cases is more likely to victimize private investors than the federal government. This article, which appeared in the August 27, 2012 issue of Westlaw Journal Bank & Lender Liability, discusses whistleblower awards under the various statutes and warns companies that enhanced whistleblower incentives necessitate actively monitored compliance programs that promote robust internal reporting.

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Topics:  DOJ, False Claims Act, FIAFEA, FIRREA, Fraud, RMBS, Whistleblowers

Published In: Finance & Banking Updates

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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