SEC Proposes Amendments to the Whistleblower Program
The SEC whistleblower program was created in 2010 incentivize securities industry insiders and others who have access to sensitive information to report suspected wrongdoing. To date, the SEC has handed out more than $250 million in whistleblower awards. In addition, the SEC has used the information obtained through whistleblower disclosures to recover more than $740 million for investors.
On June 28th, 2018, the Securities and Exchange Commission (SEC) announced that it is proposing some modifications to the whistleblower program. The public now has 60 days to comment on the SEC’s proposed rule amendments. Here, our Miami SEC whistleblower lawyers highlight the three most important things you need to know about the SEC’s proposed amendments to the whistleblower program rules.
Three Proposed Changes to the SEC Whistleblower Program
- More Authority to Adjust the Size of Whistleblower Awards
Under the SEC whistleblower statute, financial awards must be valued between 10 percent and 30 percent of the total monetary sanctions collected in any given case. The SEC wants the authority to adjust the amount of the award beyond these limits in certain cases. Specifically, the SEC wants more authority to adjust awards that are especially large or small.
This is both goods news and bad news for whistleblowers. The SEC wants the authority to award more than 30 percent of the total monetary sanctions in cases where the award would be less than $2 million, and the SEC wants the authority to award less than 10 percent of the recovery in cases where the award is larger, up to $30 million.
- An Amendment to the Definition of the Term ‘Whistleblower’
The SEC is seeking to adopt a new definition of the term whistleblower. This is like the Supreme Court’s decision in Digital Realty Trust, Inc. v. Somers. In that case, the Supreme Court found that Dodd-Frank does not protect whistleblowers who make disclosures internally within their company. The SEC’s new amendment would clearly define a whistleblower as someone who reports a securities law violation in written form to the agency.
- A Clarification as to What Constitutes ‘Original Information’
Finally, the agency seeks to offer a clarification as to what specifically qualifies as original information. Under the terms of the SEC whistleblower awards program, a person must disclose original information in order to be eligible to obtain an award. Under the SEC’s current interpretation, information obtained through an independent analysis that relies on public information, but that reveals a novel conclusion, can qualify as original information. In the proposed rule amendment, the SEC seeks to add additional language to clarify that this provision should be read in a narrow manner.
Get Help From a Miami, FL SEC Whistleblower Attorney
At Carlson & Associates, P.A., we are committed advocates for SEC whistleblowers. If you have a protected disclosure to make securities regulators, our law firm can help you protect your privacy. To learn more about what our legal team can do for you, please give us a call today at (305) 372-9700. From our office in Miami, we represent clients throughout southeastern Florida.