The Utah Securities Commission recently approved the first ever whistleblower award to a Utah man who provided information to the Utah Division of Securities which formed the basis of criminal charges. According to a Division of Securities press release, the Commission will pay $15,000.00 to a financial advisor in Saint George who reported a suspicious investment one of his clients had made that promised low risk and high returns. This is a very exciting development that demonstrates the Commission’s commitment to eliminating investment fraud in Utah.
The award was granted under the Securities Fraud Reporting Program Act, which was passed by the Utah legislature in 2011. The statute created a reward program designed to pay individuals who provide original information to the Division which forms the basis for a successful enforcement action for fraud or other violations of securities laws. Under the law, if the enforcement action results in the collection of monetary sanctions exceeding $50,000, the person who reported the violation may be entitled to a reward of up to 30% of the amount collected.
To qualify for an award, the individual must provide “original information” to the Division or the Commission, have a “reasonable belief” that the act being disclosed is a violation of securities laws, and provide the information in writing and in compliance with the Utah Administrative Rulemaking Act.
The law provides protections to individuals who report potential violations to the Division, particularly in the case of an employee of a company. Oftentimes, employees of companies that are violating securities laws are in the best position to make these reports, and can do so without fear of retribution.
The Dodd-Frank Wall Street Reform and Consumer Protection Act also created a whistleblower award program in federal cases. Its requirements are similar to those of the state law, but the monetary sanction imposed by the federal agency must exceed $1 million before a whistleblower qualifies for an award. In addition, under Dodd-Frank, the whistleblower may remain anonymous. However, if the whistleblower wishes to remain anonymous the law requires them to hire an attorney.
The lawyers in the Securities Litigation Section at Ray Quinney & Nebeker have experience filing whistleblower claims with both state and federal regulatory agencies. We are committed to ensuring you receive compensation for your decision to blow the whistle on fraud and will work closely with you throughout the entire process of filing the whistleblower claim, during the investigation, and through any appeals if your claim is not approved.