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SEC Proposes Whistleblower Rules
November 10, 2010
The SEC has proposed rules to implement the whistleblower "bounty" provisions mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. In laying out the procedural and substantive requirements that whistleblowers would be required to meet in order to be eligible for awards and the criteria that the SEC will consider in determining the amount of an award (which will range from 10-30 percent of monetary sanctions collected), the SEC indicated that it is attempting to address two key concerns about this enhanced whistleblower incentive scheme: that these provisions would encourage end-runs around company compliance programs by incentivizing whistleblowers to skip the in-house reporting process altogether in a rush to be the first in line for the SEC payouts and that attorneys, independent auditors and compliance personnel could use information obtained through their positions to make whistleblower claims. We highlight the key provisions that address these concerns in this client memorandum.