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Dodd-Frank Whistleblower Provisions

Key considerations for asset managers


It’s hard to imagine a more enticing incentive to dish dirt on one’s employer than the whistleblower provisions of the Dodd-Frank Act. U.S. government enforcement actions could probably lead to recovery of tens-to-hundreds of millions of dollars in fraud and corruption cases. A whistleblower who provides original information leading to a conviction can receive a bounty of 10-to-30 percent of the recovery amount. Such substantial monetary incentives, combined with the government’s commitment to prevent a repeat of the fraud and scandals of recent years, suggest that more whistleblower cases are likely to come. And,fraud and corruption will remain a prevalent topic among investors. 

Asset managers will likely feel more pressure to demonstrate that they have taken appropriate steps to help safeguard the money they invest from losses caused by fraud. Investors will expect strong anti-fraud and anti-corruption programmes and controls. By developing an action plan that demonstrates necessary measures are in place, and instilling trust among employees that their concerns can be properly handled internally, fund managers can position themselves to possibly avoid potentially crushing governmental penalties.

To read more, download the article written by Adam Weisman, Partner, Forensic & Dispute Services, Deloitte Financial Advisory Services LLP, for The Hedge Fund Journal.

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