Gary Gensler said in a keynote address last month that the agency plans to address significant problems in the SEC’s whistleblower program that enable a delay in compensating whistleblowers, in addition to numerous complaints that some whistleblowers have been denied rewards.
As laid out in the Dodd-Frank Act, the SEC’s rules state that a whistleblower can receive between 10 and 30 percent of the fines levied in SEC civil enforcement actions stemming from a tip, assuming the fines total more than $1 million.
The agency said in a statement late last week that the size of a potential whistleblower reward would not be considered when deciding whether to grant an award within that 10 to 30 percent range.
The statement also outlines the SEC’s intentions to expand the guidelines regarding the related action rules of Dodd-Frank, which allow whistleblowers who provide information to the SEC to cooperate with other federal agencies if the information they provide also pertains to non-SEC-related illegal activities.
In September 2020, the SEC placed significant restrictions on the scope of the related action provision’s ability to guarantee rewards for whistleblowers, drawing criticism from whistleblower advocacy groups. The SEC’s proposed rule changes would reopen possibilities for whistleblowers who give information to the SEC under Dodd-Frank.
“The policy statement issued by the SEC on August 5, 2021, is a home run for whistleblowers,” Stephen M. Kohn, chairman of the board of directors of the National Whistleblower Center, said in a statement. “The SEC has done the right thing in protecting its highly successful program from administrative abuses.”
While the agency is considering what steps to take regarding the related action rule, it will pause enforcement of the related rules, according to the Wall Street Journal. 