Banks and bankers are entrusted with exceptionally private information. As such, they are subject to myriad laws and regulations. Bankers and other bank employees should become familiar with the regulations they are subject to—not just for compliance—but also to learn their protections. They are protected by the Sarbanes-Oxley Act the Dodd-Frank Act and other industry protections. Protections are a first step. The second step includes the rewards programs available to banking employees. Available rewards programs like the SEC Whistleblower Program and FIAFEA are an avenue for whistleblowers.
This article by
TELG principal Adam Augustine Carter and TELG managing principal R. Scott Oswald was published by Westlaw Journal White-Collar Crime on May 1, 2015.
The article was updated by TELG associate Ellenor Whitfield on October 27, 2026.
Originally published in:
When Banks Don’t Do the Right Thing: Employee Options
IMPORTANT: The following article is intended as a general summary of facts and law and not as individual legal advice upon which you should rely or act. Every case is unique and specific. This article represents our firm’s best knowledge as of October 2026.
The following article is an updated version of an article originally published in Westlaw Journal White-Collar Crime on May 1, 2015.
Banks can voice platitudes regarding their obligations and stack paper upon paper that they are complying with laws and regulations, but bankers in the trenches know that protocols in practice are different from protocols in handbooks. So what can people on the frontlines do when they learn the bank they work for is not complying with the myriad of laws and regulations governing it?
The employee has two fundamental options: keep mum or disclose. The calculus for bankers in deciding whether to disclose is complicated by the fear of retaliation. To assuage that fear, Congress has enacted two types of palliatives: anti-retaliation protections and rewards programs.
Banks are entrusted with exceptionally private information, and they have to do more than pay lip service to compliance. And because of the changed landscape for compliance, bankers no longer have a choice other than to stand up. If they keep mum, they become part of the problem and put themselves in danger of complicity.
The Sarbanes-Oxley Act and Dodd-Frank Act mean that bankers cannot look the other way. The good news for bankers is that they are protected and, in some cases, rewarded for their disclosures, which is of the utmost importance as whistleblower protections and rewards are key in helping people feel comfortable enough to come forward with disclosures and ultimately safeguarding the trust individuals place in their banks and bankers.
Anti-Retaliation Protections
SOX Section 806
Congress made the right move when it enacted the Sarbanes-Oxley Act (commonly referred to as “SOX”) in July 2002. SOX created a framework of safeguards to guard against future Enron and WorldCom scandals and sought to restore investor confidence in the securities market. Section 806 of SOX took an important step by protecting employees, consultants and contractors of publicly traded companies who provide information regarding conduct that they “reasonably believe” violates securities laws and certain fraud statutes. These include specific statutory provisions relating to mail fraud (18 U.S.C. § 1341), wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and securities fraud (18 U.S.C. § 1348).
At 18 U.S.C. § 1514A(a)(1), the legislation also protects, from retaliation, any individual who provides information about company conduct that violates “any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders.”
It is not hard to imagine scenarios where this law can protect bank employees. If a bank employee discloses mail, wire, bank, or securities fraud, there is a good chance that the disclosure is covered under SOX because of the statute’s exceptionally broad application. The regulations apply to hundreds of publicly traded banks, hundreds of subsidiaries and thousands of agents (such as officers, employees, contractors and subcontractors).
If a bank employee complains of mail fraud, wire fraud, bank fraud, or security violations and the disclosures contribute to the employing bank’s decision to terminate the employee, that employee rightly has a strong basis for a SOX whistleblower retaliation suit.
As such, employees should not have to worry about retaliation when they disclose fraud or misdeeds.
Dodd-Frank Sections 922 and 1057
But SOX was not enough. President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as “Dodd-Frank”) into law on July 21, 2010. Among the bill’s wide- ranging topics are two chief sections that can shield bank employees from retaliation: Section 922 (regarding disclosures of securities law violations) and Section 1057 (regarding disclosures related to consumer financial products or services).
Section 922 of Dodd-Frank shares many features with Section 806 of SOX. Employers including banks — invite liability for discharging, demoting, suspending, threatening, harassing or otherwise discriminating against whistleblowers who disclose securities violations or violations of other laws enforced by the SEC, codified at 15 U.S.C. § 78u-6(h)(1)(A).
Section 1057 of Dodd-Frank, codified at 12 U.S.C. § 5567, creates another private right of action for employees in the financial services industry who suffer retaliation for disclosing information about fraudulent or unlawful conduct related to the offering or provision of a consumer financial product or service. The scope of coverage is quite broad. The section applies to people who engage in the the offering or provision of a consumer financial product or service, and their affiliates. For a comprehensive list, the term “financial product or service” is defined at 12 U.S.C. § 5481(15). Common examples of a consumer financial product or service are mortgages, loans, investment accounts, or credit counseling services.
Depository Institution Employee Protection Remedy
Pursuant to 12 U.S.C. § 1831j, employees of depository institutions are protected against discharge and other types of discrimination for disclosing to any Federal banking agency or to the Attorney General violations of law or regulation as well as gross mismanagement, gross waste of funds, abuse of authority or a substantial and specific danger to public health or safety by an employing depository institution or its directors, officers, or employees. The same protections apply to employees of federal banking agencies, federal home loan banks, Federal reserve banks and their agents who disclose the same type of misconduct by a depository institution, bank, agency, employee of the aforementioned organizations, director of a bank or depository institution, or specific individuals, to any such agency or bank or to the Attorney General.
Anti-Money Laundering Program
In accordance with 31 U.S.C. § 5323(g) employees are protected from their employer discharging, demoting, suspending, threatening, blacklisting, harassing or discriminating against them if they provide information in accordance with section 31 U.S.C. § 5323. Interestingly the person to whom the employee can make this disclosure to includes both members of the government, but also private individuals. For example, the employee can provide information in accordance with section 31 U.S.C. § 5323 to the Secretary, the Attorney General, a Federal regulatory or law enforcement agency, a member of Congress, a committee of Congress, a supervisor of the employee, or a person working for the employer who has authority to investigate, discover, or terminate the misconduct.
Rewards
Although most banks probably do not want their employees to know about it, the federal government has established a number of rewards programs to encourage whistleblowing.
The Financial Institutions Anti-Fraud Enforcement Act
The federal government has established a program to incentivize individuals to disclose information related to various frauds on federally insured institutions through the Financial Institutions Anti-Fraud Enforcement Act of 1990 (commonly referred to as “FIAFEA”).
In brief, as laid out in 12 U.S.C. § 4201, any person may file a declaration with the U.S. attorney general regarding actions for civil penalties affecting a depository institution insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other agency or entity of the United States. If the action is prosecuted and results in a settlement, order, or judgment, the person who disclosed the violations is entitled to a percentage award, as outlined in 12 U.S.C. § 4205(d). The program includes both frauds against banks and, in some cases, by banks against the FDIC.
Section 922 of Dodd-Frank
In addition to establishing employee protections, the Dodd-Frank Act made it possible for the SEC to establish a whistleblower office and program at the SEC. The SEC’s whistleblower office receives tips from whistleblowers and uses its discretion to prosecute violations of laws under its jurisdiction. Should a whistleblower’s tip result in a settlement or judgment, the whistleblower can be entitled to a percentage award. Generally, the SEC has focused its prosecution on frauds against shareholders. Currently, the SEC appears to be particularly interested in accounting and auditing fraud.
Anti-Money Laundering Act & Anti-Money Laundering Whistleblower Improvement Act
The Bank Secrecy Act passed in 1970 was originally implemented to help combat, among other things, money laundering. The Act was substantially improved by amendments from Congress in early 2021 via the Anti-Money Laundering Act. The Anti-Money Laundering Act was then amended in 2022 with the Anti-Money Laundering Whistleblower Improvement Act. As outlined in 31 U.S.C. § 5323(b), whistleblowers “who voluntarily provided original information to the employer of the individual, the Secretary, or the Attorney General, as applicable, that led to the successful enforcement of the covered judicial or administrative action, or related action” have the opportunity to obtain an award. If the tip results in monetary sanctions exceeding $1,000,000 then the whistleblower can obtain an award in an aggregate amount equal to between 10% and 30% of the monetary sanctions.
It is clear that the role of the whistleblower in combatting financial fraud is vital. Congress has taken beneficial steps to protect and reward bankers for their disclosures. It recognizes the valuable contributions of whistleblowers and the risks that whistleblowers take in coming forward. While more can always be done, Congress’ actions thus far have been welcome.
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Adam Augustine Carter is a principal at The Employment Law Group, P.C.; R. Scott Oswald is managing principal at the firm; Ellenor Whitfield is an associate at the firm.
