The SEC has approved the rules regarding the submission of SEC whistleblower claims pursuant to the Dodd-Frank legislation that was passed last year.
As reported By David S. Hilzenrath, here, The SEC approved rules Wednesday that could make it highly lucrative for Wall Street whistleblowers and other corporate insiders to alert the agency to securities violations. The agency was acting at the behest of Congress and President Obama, who mandated the rewards last year in legislation responding to the mortgage meltdown.
Whistleblowers will be entitled to receive 10 percent to 30 percent of the money they help the SEC collect through enforcement actions. Corporations had lobbied intensely for rules that would impose constraints on whistleblowers. But a majority of SEC commissioners rejected pleas by business groups that, before going to the SEC, whistleblowers should be required to notify the companies they are accusing and give those companies a chance to address the allegations.
“For an agency with limited resources like the SEC, I believe it is critical to be able to leverage the resources of people who may have first-hand information about potential violations,” Schapiro said in her prepared text. “And, it is especially important to investors whose savings or retirement funds may hinge on our ability to stop an ongoing fraud or obtain hidden evidence,” Schapiro said. Schapiro, an independent, and two Democratic commissioners voted for the rules over the opposition of two Republican commissioners.Republican commissioner Kathleen Casey said the SEC was overestimating its ability to triage and manage complaints from tipsters while underestimating the extent to which the rules will undermine companies’ efforts to police themselves through internal compliance programs.
The rules can be read in entirety by clicking here.
This is a victory for whistleblowers and investors alike. If you have information concerning a violation of the SEC or the commodities market, contact an SEC whistleblower attorney at McEldrew Young Purtell Merritt today for a free CONFIDENTIAL consultation at 215-367-5151.