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.”