Comments to the Securities and Exchange Commission’s proposal to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act’s whistleblower protections have drawn mixed reactions. While some commenters think that employees of publicly traded companies should have to report alleged wrongdoing to internal compliance programs before they can be eligible to a monetary award, others believes that this requirement would make whistleblowers less willing to come forward. Still others have said that whistleblowers shouldn’t be allowed to hire lawyers on a contingency basis. Commenters also were in disagreement over the proposed rule’s overall impact.
Per new Section 21F of the Securities Exchange Act of 1934, a whistleblower program has been established that requires the SEC to monetarily award eligible whistleblowers that voluntarily give the agency original information about a federal securities laws violation if the tip results in successful enforcement of an administration or judicial action that leads to sanctions of over $1 million. The SEC proposed rule has the agency’s Whistleblower Office administering the program, prohibits whistleblowers that engaged in wrongdoing from being eligible for the financial award, and includes anti-retaliatory provisions protecting whistleblowers.
One theme touched upon in many of the comment letters is the desire for the SEC to make the final rule more “user friendly,” which is a term found in the statute. Critics believe that the SEC’s proposal doesn’t meet that standard. Still others expressed concern about what the SEC would consider “original” information presented by a whistleblower. Also, while some commenters wanted firms’ internal compliance programs to have the opportunity to initiate its own meaningful investigation first before the whistleblower gives the SEC a similar submission, the National Whistleblowers Center submitted a comment letter arguing that employees shouldn’t have to report alleged wrongdoing internally first to qualify for the SEC whistleblower program.
Related Web Resources:
Why Whistleblowers Should Act Quickly and Consult Competent Legal Counsel, Stockbroker Fraud Blog, December 18, 2010
Wall Street Whistleblowers May Be Eligible to Collect 10 – 30% of Money that the Government Recovers, Stockbroker Fraud Blog, July 29, 2010