We post many stories about the need for banks to increase their defenses against cyberhacking. The Federal Reserve, Office of Comptroller of the Currency (OCC) and the FDIC all regulate banks and require tough cybersecurity measures. There is a possibility for whistleblowers to earn large awards when banks cover up hacking attempts or fail to take adequate security measures. Now it appears that the FDIC has been the subject of cyber hacking!
A new report from CNBC reveals the FBI is investigating how hackers gained access to FDIC computers. The breaches began in 2010 and continued for years. The cyberhacking is believed to be the work of the Chinese military.
Cyberhacking Continues at FDIC
While the FBI continues to investigate the prior incidents, the FDIC reported 7 new major cybersecurity incidents in 2015 and 2016. CNBC quotes a Reuters source as saying that many of the incidents were “confirmed data breaches.”
It is unknown if the newest incidents are tied to the Chinese government. Last year President Obama and Chinese President Xi Jinping agreed to avoid cyber espionage with one another. The two leaders agreed not to “conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage.”
Some Republican lawmakers have accused the FDIC of covering up the breach. The agency, however, says it could not fully comply with Congressional requests about the breach so as not to jeopardize the FBI investigation.
The cover up allegations are significant since banks are required to promptly report cyberhacking incidents. The FDIC would lose credibility if it is guilty of the same wrongdoing as the banks it regulates.
Cyberhacking and Whistleblower Awards under FIRREA
The Financial Institutions Reform Recovery and Enforcement Act (FIRREA) prohibits a wide range of misconduct by and against banks. Actions that can materially weaken or destabilize an FDIC insured banks violate FIRREA. Recent court ruling say that the banks themselves can be prosecuted.
Congress passed FIRREA in the wake of the saving and loan crisis during the 1980’s. Back then, the FDIC paid billions to bail out failed thrift institutions. Congress hoped that FIRREA would allow the government to go after insiders who mismanaged outsiders who committed fraud. Not until the 2008 financial crisis was the law expanded to include prosecutions against the banks themselves.
Failing to properly protect customer data could certainly destabilize or hurt the bank. It also hurts taxpayers since the FDIC is the ultimate guarantor of depositor accounts.
After the 2008 financial crisis, Congress passed a second law called FIAFEA. Short for the Financial Institutions Anti-Fraud Enforcement Act, FIAFEA contains a whistleblower award provisions. When both laws are used together, whistleblowers who report FIRREA violations can get paid an award. Those awards are up to $1.6 million.
To qualify for a FIRREA award, the whistleblower needs inside information about misconduct affecting the security of the bank. Failure to report major cyber breaches, cybersecurity cover ups or lax data security could all qualify.
An added benefit of FIRREA is the ability to report confidentially.
MahanyLaw – America’s FIRREA Whistleblower Award Lawyers
The whistleblower lawyers at Mahany Law have helped folks in the financial sector collect over $100 million in awards. Our measure is to help you stop the wrongdoing and earn the maximum possible award.
We also can help if you are the subject of illegal retaliation for reporting wrongdoing.
All inquiries are protected by the attorney – client privilege and kept completely confidential. There is never a fee for a consultation and our no fees or costs for our services unless we collect an award for you.