The financial industry is one of the largest and most regulated in the country. The activities undertaken by banks and other financial services firms impact every aspect of daily life, from housing and food, to education, health and more.
Relevant fraudulent conduct in the financial industry include the following:
- The pricing and sale of financial products, including their risk disclosures
- The mispricing or manipulation of securities, derivatives, commodities and more
- The misuse of funds received from federal bailout programs known as the “Troubled Asset Recovery Program” (TARP) and the “Capital Purchase Program” (CPP)
- The failure to follow the Federal Reserve’s Term-Asset-backed Securities Loan Program (TALF) requirements (such as prohibition by hedge funds on the use of off-shore vehicles)
- Violations of Treasury auction requirements
- Securities fraud violations or insider trading
- Mortgage fraud, bid-rigging, kickbacks or “pay for play”
While federal and state false claims act violations may be implicated when the government suffers losses, there are numerous whistleblower programs aimed directly solely at addressing fraudulent conduct by banks, insurance carriers and other participants in the financial services industry. These financial industry-specific whistleblower programs include the following:
- The Banking Whistleblower Program rewards whistleblowers who provide the government with information about criminal banking violations.
- The SEC Whistleblower Program rewards and protects whistleblowers who submit tips to the SEC related to violations of federal securities laws.
- The Commodity Futures Trading Commission’s Whistleblower Program rewards and protects whistleblowers who expose violations of the Commodity Exchange Act, which regulates the trading of commodity futures.
- The Internal Revenue Service’s Whistleblower Office rewards and protects whistleblowers who fail to pay the taxes they owe.
- Certain state laws aimed at preventing insurance fraud and protecting whistleblowers who bring these violations to the government’s attention.
Given the size and breadth of the financial industry, there are numerous potentially overlapping applicable whistleblower programs. Potential whistleblowers should proceed cautiously to ensure that they identify and comply with each relevant program.