Securities and Exchange Commission

On June 29, 2018 the U.S. Securities and Exchange Commission (SEC) announced proposed amendments that undermine the rules governing its successful whistleblower program.

National Whistleblower Center (NWC) has issued an action alert urging commentary on these proposed amendments. The SEC proposal puts caps on rewards related to cases resulting in $100 million or more in fines. This removes the incentive to blow the whistle on large corporations committing fraud, and consequently will allow large corporate fraud to go unreported and unpunished.

Continue Reading Action Needed to Protect SEC Whistleblower Program

The SEC is proposing controversial amendments to its whistleblower program. The new rules would potentially limit the size of awards that whistleblowers are entitled from successful qui tam action. Under current directives, a whistleblower who provides information that leads to an SEC enforcement action receives 10%-30% of the recovery by the agency. This monetary provision incentivizes potential whistleblowers to disclose rather than remain silent.

Continue Reading Proposed SEC Rule Will Hurt Whistleblower Program

In Digital Realty Trust v. Somers the Supreme Court issued a destructive decision that will have far-reaching consequences for whistleblowers. Seemingly unaware of the practical consequences of its decision, the Supreme Court unanimously ruled to leave whistleblowers who report internally without critical protections under the Dodd-Frank Act.

Writing for Law 360, NWC Executive Director Stephen M. Kohn explains that employees now take grave risks in using internal compliance programs. In light of the Supreme Court’s decision, whistleblowers should hire an attorney and take their complaints directly to the Securities and Exchange Commission (SEC).

Continue Reading National Whistleblower Center Executive Director Explains Why Supreme Court Decision in Digital Realty is Disastrous for Internal Compliance Programs  

Washington, D.C. November 28, 2017. Rejecting arguments by Senator Charles Grassley, the Securities and Exchange Commission (“SEC”) and numerous representatives from the whistleblower community, during today’s oral argument in Digital Realty Trust v. Somers (No. 16-1276), the U.S. Supreme Court Justices expressed support for stripping internal whistleblowers of protection under the Dodd-Frank Act (“DFA”).

Continue Reading Supreme Court Poised to Eviscerate Internal Reporting

SEC anticipates paying an additional $221 million to whistleblowers in FY2018.

Washington, DC, November 16, 2017.  The Securities and Exchange Commission’s Office of the Whistleblower issued its annual report today. The Commission confirmed that “whistleblowers have provided tremendous value to its enforcement efforts and significantly helped investors.” It also confirmed that whistleblower disclosures have “directly” contributed to “hundreds of millions of dollars returned to investors.” Continue Reading SEC’s Annual Report Confirms $50 Million Paid to Whistleblowers

Corporate whistleblower protection “undermined” if internal complaints not protected.

Washington, D.C. June 26, 2017.  The U.S. Supreme Court granted certiorari today in the case of Digital Realty Trust, Inc. v. Somers, Paul.  The Court will decide the issue of whether internal reports to managers are covered under the Dodd-Frank Act’s anti-retaliation law. Continue Reading U.S. Supreme Court to Review Dodd-Frank Anti-Retaliation Provisions

Later this week, the House of Representatives is set to vote on the Financial CHOICE Act. Congressman Jeb Hensarling (R – TX), Chair of the House Financial Services Committee, designed and championed this bill. The CHOICE Act will repeal major parts of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, and deregulate U.S. financial markets. The bill also advances a toxic anti-whistleblower policy (Section 828), which would undermine the U.S. Securities and Exchange Commission’s (SEC) highly successful whistleblower program—incapacitating the most effective tool to rein in misconduct and criminal activity on Wall Street.

Continue Reading NWC Leads Opposition to Anti-Whistleblower Financial CHOICE Act

Today, National Whistleblower Center Executive Director Stephen Kohn submitted testimony to the House Financial Services Committee in defense of the Securities and Exchange Commission’s (SEC) whistleblower program—a highly successful program that has protected investors and recovered $1 billion from Wall Street fraudsters since its inception.

Section 823 of the draft Financial Choice Act of 2017 directly, and negatively, impacts the whistleblower protections afforded under the Securities and Exchange Act (“SEA”).  While it purports to exclude opportunistic individuals from the SEA’s reward provisions if they are “culpable” for the violation for which they are reporting, this amendment is not needed and would undermine the SEA’s highly successful whistleblower law.

Continue Reading National Whistleblower Center Testifies Before House Committee in Defense of the SEC Whistleblower Program

Washington, D.C., July 8, 2016. Last week, the Securities and Exchange Commission announced that the Chief of the Office of the Whistleblower, Sean McKessy, would leave the agency in July. Mr. McKessy was the first head of the SEC’s whistleblower program and helped to establish the important and effective whistleblower office.

Continue Reading Sean McKessy, Chief of SEC’s Whistleblower Office, Leaving Agency Later This Month