Call Now For a Free Consultation:
(614) 532-4576
Nationwide Representation

SEC Votes to Adopt New Whistle-Blower Program

On Wednesday, the SEC voted 3-2 to adopt the new whistle-blower program included in last year's Dodd-Frank financial reform law.

Under the new rules, tipsters who provide information that leads to $1 million or more in penalties will receive up to 30 percent of the money the SEC recovers through the enforcement action. (For more information about the program, click here.) That could mean a lot of money. As mentioned by The Associated Press, if a whistleblower had been responsible for the SEC's $550 million settlement with Goldman Sachs, the tipster could have received up to $165 million.

Critics of the program have been voicing opposition to its implementation for months, and it is clear that attitudes remain divided. The SEC's two Republican commissioners voted against the program, and others in the industry continue to speak out against it.

After the vote, the U.S. Chamber of Commerce said (as quoted by the AP):

"The SEC has chosen to put trial-lawyer profits ahead of effective compliance and corporate governance. This rule will make it harder and slower to detect and stop corporate fraud, by undermining (internal) compliance systems."

Most investor advocates and financial regulators, however, disagree. According to James Kaplan, of Audit Integrity, more than 90 percent of the SEC's enforcement actions come from tips by whistleblowers. The new program's increased protections and higher financial rewards should mean the SEC will receive substantially more tips, which means more actions will be filed in the fight to stop corporate fraud.

The new rules will go into effect in approximately two months. Tips received from July 2010 to now will also be eligible for an award under the new rules.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation
Atlanta Office

945 East Paces Ferry Road, Suite 2275
Atlanta, GA 30326
Columbus Office

305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram