NY Attorney General Eric Schneiderman recently announced his plans to propose legislation that would create a whistleblower incentive program at the state level. The proposal, titled the Financial Frauds Whistleblower Act, would provide monetary awards to eligible individuals who report original information about illegal activity in the banking, insurance, and financial services industries. The Financial Frauds Whistleblower Act also would enhance anti-retaliation protection for employees who report suspicious or illegal activity. Additionally, the proposal provides for confidentiality for whistleblowers.
Although the text of the proposal is not yet available, it appears that the state’s bounty program would largely mirror the incentive program established under Dodd-Frank Act. Steven J. Pearlman, co-chair of Proskauer’s Whistleblowing & Retaliation practice group, was quoted on the practical implications of the proposed program in an article on Law360, stating that whistleblowers will consider “who’s going to pay out faster, and who’s going to pay out more” when deciding whether to report a tip to the state or federal agency. The AG’s announcement also attracted attention from other media outlets, including the Wall Street Journal (subscription required), which noted in part that the state program may increase payouts in banking cases, which are subject to caps under federal law.
“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,” AG Schneiderman stated in his press release.