Whistleblower Alert! SEC Amends Whistleblower Rules to Incentivize Whistleblower Tips. The first rule change allows the Commission to pay whistleblowers for information and assistance in connection with non-SEC actions.
Whistleblower Alert! SEC Amends Whistleblower Rules to Incentivize Whistleblower Tips. The first rule change allows the Commission to pay whistleblowers for information and assistance in connection with non-SEC actions. The second rule affirms authority to consider amount of award and increase award
Source: https://www.sec.gov/news/press-release/2022-151
Other Commentary:
Statement on Final Amendments to the Whistleblower Program - Chair Gary Gensler
In 2010, Congress under the Dodd-Frank Act directed the SEC to establish a whistleblower program, which to date has greatly aided the Commission’s work to protect investors. In the years since the program was established, the SEC has used whistleblower information to obtain sanctions of over $5 billion from securities law violators, return over $1.3 billion to harmed investors, and award over $1.3 billion to whistleblowers for their service.
Today’s amendments enact two changes to help enhance the whistleblower program.
The first amendment expands the circumstances in which a whistleblower who assisted in a related action can receive an award from the Commission for that related action rather than from the other agency’s whistleblower program.
The second amendment concerns the Commission’s authority to consider and adjust the dollar amount of a potential award. Under today’s amendments, when the Commission considers the size of the would-be award as grounds to change the award amount, it can do so only to increase the award, and not to decrease it. This will give whistleblowers additional comfort knowing that the Commission would not decrease awards based on their size.
Statement on the Final Rules Related to the Whistleblower Program - Commissioner Mark T. Uyeda
Specifically, the final amendments (1) expand the scope of related actions eligible for an award under the Commission’s Whistleblower Program, and (2) amend the rules so that the Commission may use its statutory authority to consider the dollar amount to increase, but not decrease, the award.[2] While I support the important work of the staff in the Office of the Whistleblower in their efforts to arrive at an appropriate result in evaluating claims, I am unable to support today’s amendments.
The Commission is revisiting rules that were finalized a little over a year and a half ago. Reversing rules shortly after adoption, in the absence of a regulatory weakness or failure, sets a bad precedent, risks eroding the Commission’s regulatory credibility, and increases costs for market participants by requiring frequent reevaluations of compliance obligations.
To the extent that data points to a regulatory weakness or failure, it may be necessary to revisit an existing regulatory framework—whether that framework is decades old, or newly adopted. Robust evidence should, however, underpin decisions to revisit recently adopted rules. Absent such evidence, the Commission should monitor the effectiveness of recently adopted rules, with a view to refining any aspects that require adjustments, while avoiding destabilizing wholesale revisions.
