The chairman of the Securities and Exchange Commission (SEC) said Friday he does not want to put a “cap” on awards to SEC whistleblowers.

SEC Chairman Jay Clayton said a provision that would give the SEC discretion over awards of more than $30 million has been “mischaracterized” as a “cap.” He made the comments in a letter accompanying the whistleblower office’s annual report to Congress.

The proposed provision was not a “cap,” it could not and was not intended to operate as a “cap,” and I do not support a cap.  Congress vested in the Commission the authority and responsibility to use our good judgment and experience to determine award amounts within the range of 10-30% prescribed by Congress, and we should do just that.

The mischaracterization did have a salutary effect.  The whistleblower bar, members of Congress and other commentators brought to my attention the fact that the mischaracterization raised uncertainty about the agency’s commitment to the program.  They explained that uncertainty, including even uncertainty regarding the award process for very large awards, could deter potential whistleblowers from coming forward.  This reality of human emotion and decision-making under uncertainty is not lost on me. 

 While all cases are different and award processes that incorporate the exercise of discretion have an inherent level of imprecision, it is my aim that, as we gain greater experience with the whistleblower program, the award process will be more transparent.

The National Whistleblower Center has opposed proposed changes, which staff say would damage the program by adding additional reporting requirements and allowing the SEC to cap some awards. The NWC has met with Clayton and has filed numerous comments on the rule. An SEC meeting to consider the rules was cancelled in October; Clayton said the panel will “consider final rules in the near future.”
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Full transparency needed evaluate the Commission’s proposed rules.

sec-whistleblower-program-front-building

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
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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”).

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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.”
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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.
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The SEC Office of the Whistleblower post Notices of Covered Action where a final judgment or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list below:  
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The SEC Office of the Whistleblower post Notices of Covered Action where a final judgment or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list below:  
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On August 4, 2015, the Securities and Exchange Commission (“SEC”) issued an interpretive rule to dispel confusion over whether employees who only report violations to their employer are protected by the Dodd-Frank whistleblower protection provision. The SEC will formally publish this interpretative rule in the Federal Register and it will operate as an amendment to the Dodd-Frank whistleblower rules. A copy of the SEC’s interpretative ruling can be found here.
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Washington D.C., July 17, 2015: Today the Securities and Exchange Commission (SEC) announced that it paid a whistleblower award of more than $3 million. The company insider whose information helped the SEC crack a complex fraud, received the third highest award to date under the SEC’s whistleblower program.

Stephen M. Kohn, Executive Director of the National Whistleblower Center praised the award stating “Paying monetary rewards to whistleblowers is the best way to ensure that the top management of publicly traded companies understand that there is a new ‘cop on the block.’ Those new cops are their own employees, who can now work side-by-side with SEC investigators in documenting violations of law. Granting large public rewards is the single best tool the SEC has to send this message.” 
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