What Is The Dodd-Frank Act?

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Introduction

If you have looked into the complex and murky world of corporate whistleblowing, you might have heard of an important piece of legislation known as the Dodd-Frank Act. This is one of the most important legal developments in the world of whistleblowing and protecting whistleblowers, but what actually is the Dodd-Frank Act, and why do you need to know about it?

The Wall Street Reform and Consumer Protection Act, better known as the Dodd-Frank Act, or simply as Dodd-Frank, is legislation approved by the United States Congress in response to the irresponsible financial industry activity that directly caused the 2007-2008 global financial crisis. It aimed to make the US financial system more secure for customers and taxpayers.

The legislation, named after its two main sponsors, Sen. Christopher J. Dodd (D-Conn.) and Rep. Barney Frank (D-Mass. ), contains a huge number of provisions (the document is 848 pages long!) designed to be implemented over a number of years.

In this article, we will look at the Dodd-Frank Act, what it does, and how you can use it to make a claim for compensation if you have relevant information to report.

What is Corporate Whistleblowing?

A corporate whistleblower is a current or former employee of a corporation who reports wrongdoing by the firm or its workers. Illegal behavior, fraud, waste, and abuse are all major examples of misconduct. Whistleblowers usually bring their concerns to the attention of a supervisor, senior management, or a government body.

Whistleblowers play a critical role in holding businesses responsible for their activities. Many incidents of misbehavior would go unreported and uncontrolled if whistleblowers did not exist.

Whistleblowers are protected from reprisal by their employers under the law. These laws vary by country and region, but they often give certain legal safeguards for whistleblowers, such as barring employers from firing or otherwise retaliating against them. The most important piece of legislation for whistleblowers in the USA is the Dodd-Frank Act.

The Background to the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in 2010 under the Obama administration and is an exceptionally large piece of financial reform legislation.

The Dodd-Frank Act, or Dodd-Frank, created a slew of new government organizations tasked with supervising the law’s many components and, by extension, various parts of the financial system.

The 2007-2008 financial crisis was the biggest economic disaster to hit the country (and, unfortunately, the rest of the world) since the 1929 Wall Street crash. In broad terms, it was caused by greedy conduct and insufficient monitoring of financial institutions.

The weakening of financial sector laws in the decades preceding 2007 enabled many sorts of institutions in the United States’ financial services industry to lend money in riskier ways than ever before. The housing sector, in particular, saw an unprecedented boom that could not be sustained.

The bubble burst, bringing down the banking industry and worldwide stock markets. This was disastrous for ordinary people across the globe, with the bankers’ greed throwing millions of people’s lives into turmoil. It precipitated the deepest global recession in decades, so Dodd-Frank was enacted to prevent something like this from occurring again.

What’s in the Dodd-Frank Act?

Dodd-Frank created a large number of new regulations and agencies with the goal of lowering systemic risk, which occurs when the failure of one business threatens to disrupt the whole financial system. 

These included efforts to restrict the overall risk that banks may take on, ensuring that they can be broken up in an orderly manner when facing bankruptcy, and enhancing federal regulation of their operations. 

The Financial Stability Oversight Council (FSOC), led by the Secretary of the Treasury, was established to strengthen cooperation among financial authorities. The FSOC can identify financial institutions, including non-banks, for stronger control by the Fed, whose powers were enlarged by Dodd-Frank beyond inflation and employment objectives to include financial system and bank solvency oversight.

The Consumer Financial Protection Bureau (CFPB) was established in response to a perceived need for a centralized organization to combat mortgage fraud and other financial sector abuses. According to the CFPB, its enforcement operations have resulted in more than $16 billion in consumer relief due to breaches of several consumer financial protection laws.

In addition, Dodd-Frank reinforced and expanded the whistleblower program that had been in place since 2002. It established a mandatory bounty program in which whistleblowers can receive 10% to 30% of the proceeds of a litigation settlement, expanded the scope of a covered employee to include employees of a company’s subsidiaries and affiliates, and increased the statute of limitations for whistleblowers to file a claim against their employer from 90 to 180 days after the violation is discovered.

What to Do if You Think You Have A Dodd-Frank Whistleblower Claim

Not everyone who chooses to make a report of corporate misconduct to regulatory boards like the CFTC or SEC actually properly qualifies as a whistleblower under the regulations and restrictions of the Dodd-Frank Act. There are several stringent criteria that you need to meet in order to receive payouts and protections as a whistleblower under Dodd-Frank. 

To make sure you qualify for compensation, it is important to speak with an Oberheiden P.C. Dodd-Frank whistleblower attorney before you file. 

They will help you to prepare a case, and have the expertise and knowledge to identify whether your case is worth pursuing, as well as guiding you through the complex processes and ensuring that all your documentation meets the requisite criteria for a successful legal case.

Successfully filing a Dodd-Frank claim can get you substantial compensation and protection from retaliation, but it is a very complex process and not easy to do. 

This will require highly skilled legal representation from someone specializing in this particular area of law: lawyers with more general expertise will not be able to give you the best chance of success here. 

You need to know that your legal counsel can protect you at every step of the process, and doing so takes a very deep understanding of all the nuances of the system.

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