SEC Proposes Changes to Whistleblower Program


The SEC has proposed changes to its 8-year-old whistleblower program that, if approved, will have a significant impact on those who report information about wrongdoing against investors and the marketplace. Though many of the proposed changes would strengthen the ability of whistleblowers to receive awards as well as the anti-retaliation protections extended to them, some would place restrictions on the rewards that whistleblowers can receive.

Whistleblower programs are specifically designed to encourage those with inside information about wrongdoing and fraud to come forward with information to facilitate charges filed. When information provided by a whistleblower results in a successful litigation effort, they are rewarded with a percentage of the damages recovered.

The SEC’s program has resulted in over $1.4 billion being recovered from wrongdoing, and SEC Chairman Jay Clayton spoke of the importance of the program in announcing the proposed changes. “Whistleblowers have made significant contributions to the SEC’s enforcement efforts, and the value of our whistleblower program is clear.

The proposed rules are intended to help strengthen the whistleblower program by bolstering the Commission’s ability to more appropriately and expeditiously reward those who provide critical information that leads to successful enforcement actions. I look forward to public feedback and encourage everyone with interest to give us their ideas on the proposed rules.”

Proposed Changes Would Give SEC More Tools to Reward Whistleblowers

The changes that the SEC is proposing include extending the types of agreements that result in awards to include settlement agreements outside of judicial or administrative proceedings and deferred prosecution agreements and non-prosecution agreements.

They also would increase the percentage of the award given in smaller cases and restrict whistleblower awards viewed as unreasonably large. The changes address potential double recoveries that are awarded when a whistleblower’s actions are relevant to more than one agency or whistleblower program.

Author: Terri Oppenheimer

Terri Oppenheimer

Terri Oppenheimer is an independent writer, editor, and proofreader. She graduated from the College of William and Mary with a degree in English. She specializes in providing content for websites and finds tremendous enjoyment in the things she learns while doing her research. Her specific areas of interest include health and fitness, medical research, and the law.