Full transparency needed evaluate the Commission’s proposed rules.

Washington, D.C.  September 17, 2018.  Today the National Whistleblower Center (NWC), the nation’s leading whistleblower advocacy group, formally requested the U.S. Securities Exchange Commission (SEC) to extend the public comment period for proposed changes to the SEC Whistleblower Program. 

The request is based on the failure of the SEC to produce 15,877 emails and other documents it identified in response to a Freedom of Information Act request filed by the NWC.  The NWC FOIA request sought documents related to lobbying efforts by Wall Street firms and the Chamber of Commerce that gave rise to the SEC’s proposed rules.

The proposed rule has two highly criticized provisions that will significantly reduce the rights afforded whistleblowers under the current rules, including a “cap” on the amount of recovery available to whistleblowers in large fraud cases, and rendering it nearly impossible for an “Analyst” to recover an award based on his or her disclosures to the Commission.  The NWC sought Commission documents concerning all communications between the Chamber of Commerce and regulated companies concerning these anti-whistleblower proposals.  The FOIA targeted lobbying efforts by Wall Street which led to the drafting of the pending rules.

The NWC’s FOIA was filed on July 18, 2018 and sought all documents “related to any proposal to limit or cap the amount of awards obtained by whistleblowers under the Dodd-Frank Act,” among other relevant materials.  The request explicitly sought all communications between the Chamber of Commerce and the SEC between January 2017 and the date in which the Commission announced its proposed changes.

On August 7, 2018 the SEC’s Associate General Counsel determined that the NWC had a “compelling need” to receive these documents “on an expedited basis.”

Thereafter, the SEC conducted a search and determined that there were 15,877 emails that could be responsive to NWC’s request. These included 1,078 emails that referenced both “whistleblower” and “Chamber of Commerce” created between January 2, 2017 and June 29, 2018.

NWC Executive Director Stephen M. Kohn stated as follows: 

“The NWC is concerned that some of the proposals announced by the Commission reflect the policy positions of the U.S. Chamber of Commerce.  The Chamber has staked out a radically anti-whistleblower position, and for years has sought to “cap” the amount of rewards available to whistleblowers.  Congress and other agencies have rejected these proposals.  The SEC is the first executive agency to endorse “caps” in a proposed rule, and based on the public comments of the Commissioners, appears poised to be the first agency to ever adopt this discredited and highly destructive Chamber of Commerce proposal.  Consequently, there is a compelling need for full and complete transparency as to why the Commission proposed this rule, and what lobbying efforts were behind the proposals.

“The public needs this information to fully understand the intent behind the Commission’s proposals, and to be in a position to fully and properly respond to the proposed rules.  The Commission’s attorneys have recognized this compelling need, yet no documents related to the role of the Chamber of Commerce or other Wall Street lobbyists have been produced as of the close of business, Friday September 14th.  Thus, even if the Commission did a last-minute document dump, the public would be denied an opportunity to evaluate these materials and properly comment on the Commission’s proposals.”

The current deadline for public comments is September 18, 2018.  All members of the public are urged to file their own comments on the proposed rule.  Comments can be submitted by email to rule-comments@sec.gov. If you choose to do this, make sure to include File Number S7-16-18 on the subject line.  The National Whistleblower Center is urging all persons concerned about corporate accountability to TAKE ACTION and submit a comment to the Commission demanding the public comment period be extended.

  • A copy of the SEC’s notification of the documents potentially responsive to the FOIA is linked here.
  • A copy of the NWC’s Letter to SEC requesting an enlargement of the time period to file comments on the rule is linked here