For corporate whistleblowers, the Securities and Exchange Commission (SEC) may no longer be the only game in town. New York Attorney General Eric T. Schneiderman recently announced plans to introduce the Financial Frauds Whistleblower Act, a whistleblower program that will provide monetary incentives for who report financial misconduct.
“New York has a unique opportunity to set the gold standard for states seeking to expose and hold individuals accountable for financial crimes. This law will be the strongest, most comprehensive in the nation, and is long overdue for a state with the world’s most important financial markets,” Schneiderman said in a press statement. Attorney General Schneiderman’s proposed whistleblower statute is modeled after the SEC’s bounty program. As previously discussed on the Scarinci Hollenbeck Business Law Blog, the SEC whistleblower program is going strong. The agency received 3,620 whistleblower tips in FY 2014, which represents a more than 20 percent increase in the number of whistleblower tips in just two years. Last September, the SEC authorized its largest payout to date, an award of more than $30 million to a whistleblower who provided key original information that led to a successful enforcement action.
The proposed New York whistleblower program would specifically provide financial compensation to whistleblowers who voluntarily report fraud in the banking, insurance, and financial services industries, and whose tips lead to more than $1 million in penalties or settlement proceeds. Whistleblowers would be eligible to receive 10-30 percent of the money obtained.
As with similar whistleblower programs, the proposed law would also guarantee the confidentiality of the whistleblower’s information. In addition, current and prospective employers would be expressly prohibited from discharging, demoting, suspending, or otherwise harassing employees who report suspicious or fraudulent activity to supervisory or internal compliance staff.
With regard to logistics, a Financial Services Whistleblower Awards program would be created within the State’s Department of Financial Services to reward whistleblowers for tips to that agency. Payments to whistleblowers would be funded from monetary recoveries paid by wrongdoers and not from state funds.
In order to be implemented, the New York State legislature must approve the bill. We will be closely tracking the status of the proposal and will provide updates as they become available.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
NY AG Proposes State Whistleblower Program for Financial Fraud
Author: Dan Brecher
For corporate whistleblowers, the Securities and Exchange Commission (SEC) may no longer be the only game in town. New York Attorney General Eric T. Schneiderman recently announced plans to introduce the Financial Frauds Whistleblower Act, a whistleblower program that will provide monetary incentives for who report financial misconduct.
“New York has a unique opportunity to set the gold standard for states seeking to expose and hold individuals accountable for financial crimes. This law will be the strongest, most comprehensive in the nation, and is long overdue for a state with the world’s most important financial markets,” Schneiderman said in a press statement. Attorney General Schneiderman’s proposed whistleblower statute is modeled after the SEC’s bounty program. As previously discussed on the Scarinci Hollenbeck Business Law Blog, the SEC whistleblower program is going strong. The agency received 3,620 whistleblower tips in FY 2014, which represents a more than 20 percent increase in the number of whistleblower tips in just two years. Last September, the SEC authorized its largest payout to date, an award of more than $30 million to a whistleblower who provided key original information that led to a successful enforcement action.
The proposed New York whistleblower program would specifically provide financial compensation to whistleblowers who voluntarily report fraud in the banking, insurance, and financial services industries, and whose tips lead to more than $1 million in penalties or settlement proceeds. Whistleblowers would be eligible to receive 10-30 percent of the money obtained.
As with similar whistleblower programs, the proposed law would also guarantee the confidentiality of the whistleblower’s information. In addition, current and prospective employers would be expressly prohibited from discharging, demoting, suspending, or otherwise harassing employees who report suspicious or fraudulent activity to supervisory or internal compliance staff.
With regard to logistics, a Financial Services Whistleblower Awards program would be created within the State’s Department of Financial Services to reward whistleblowers for tips to that agency. Payments to whistleblowers would be funded from monetary recoveries paid by wrongdoers and not from state funds.
In order to be implemented, the New York State legislature must approve the bill. We will be closely tracking the status of the proposal and will provide updates as they become available.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
