A.G. Schneiderman Announces Financial Frauds Whistleblower Act in New York
News in the world of Whistleblower/False Claims legislation is picking up. First of all, the State of New York may be in position to create (wait for it) a new whistleblower law:
“Attorney General Eric T. Schneiderman announced today that he would propose legislation in Albany to protect and reward employees who report information about illegal activity in the banking, insurance, and financial services industries. Currently, no law exists in New York State to protect or incentivize whistleblowers who report securities and other financial frauds. Attorney General Schneiderman’s bill – the Financial Frauds Whistleblower Act – would provide financial compensation to whistleblowers who voluntarily report fraud in their industry, and whose tips lead to more than $1 million in penalties or settlement proceeds.”
I don’t mean to quibble with the AG of NY, to use Bill Belichick lingo, but there is a False Claims Act in the State of New York, to the extent that if State funds or even city funds are used in a financial fraud scheme there is liability for financial fraud under the New York State False Claims Act.
However, the law the AG of NY is proposing sounds like it would be analogous on a state level to provisions in the Dodd-Frank Legislation, which created the SEC and the CFTC whistleblower laws and their related whistleblower offices. That would be terrific indeed. The SEC can not possibly pursue all the tips being provided to it by concerned citizens sniffing out financial fraud. It has to help to have another law on the books that actively protects whistleblowers. This kind of progress is heartening. It would mean securities fraud that defrauds anyone in the state of New York could be subject to a whistleblower reward law. The AG is proposing a reward of 10-30%. Not only is it a great proposal, but also it’s great to see that a state Attorney General thinks whistleblowers deserve protection and politically feels it’s a smart thing to propose.
Even as this is going on, the State of Maryland is considering expanding its own False Claims Act to include more wide spread claims. Currently Maryland’s law only allows for health care funds to be the subject of a case. The AG of MD is pushing for a stronger law with bi-partisan support in the legislator and lobbying by Taxpayers Against Fraud to help achieve the goal of a more expansive law.
In addition, word from the National Whistleblower Center is that there is a newly formed “whistleblower caucus” a bipartisan group in Congress. It’s a modestly sized group of legislators but it is good to see a few willing to stand up for whistleblowers in Congress today. Led by the indispensible Charles Grassley (R-Whistleblowers) this group may protect the laws whistleblowers need to survive.
We need all the advances in legislation we can get to defend the right of individuals to report fraud and obtain rewards for doing so. As a colleague of mine wrote me yesterday, you never know what happens when legislators get confronted with interests that bring large bags of cash to the table. Is it possible these elected officials understand that siding with the whistleblowers is the right thing? Hopefully it’s also becoming the popular thing.
In the meantime, it is gratifying to be able to report some good news in the fight for new and progressive whistleblower laws.