SEC Whistleblower Rules: A Dodd-Frank Reading List

For your reference, here’s what leading law firms are telling us about the final Dodd-Frank whistleblower provisions recently enacted by the Securities and Exchange Commission (SEC):

Small Business Securities Bulletin: SEC Adopts Rules Implementing the Whistleblower Provisions of Dodd-Frank (Ober|Kaler)

“Consistent with Dodd-Frank and the proposed rules, the final rules provide that individuals who voluntarily provide the SEC with original information relating to a possible violation of federal securities laws in accordance with procedures established in the final rules, which leads to the successful enforcement by the SEC of a federal court or administrative action in which it obtains monetary sanctions totaling more than $1 million, are entitled to an award equal to between 10% and 30% of the amount collected.” Read more »

SEC’s Final Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Covered Entities (Morgan Lewis)

“According to the majority of the Commissioners, the final rules attempt to balance the tension between encouraging whistleblowers to come forward to the SEC while simultaneously discouraging them from bypassing internal company compliance programs. The dissenting Commissioners disagreed, taking the position that the failure to require mandatory internal reporting would have a detrimental effect on internal compliance and spur whistleblowers to bypass those internal mechanisms in favor of directly reporting to the SEC.” Read more »

SEC Stays on Mission, Resists Pressure to Water Down Whistleblower Protections (Mark Barnes)

“[T]he SEC stayed true to its mission in adopting the final rules on May 25, 2011, by retaining the right of a whistleblower to proceed directly to the SEC and still be eligible to claim whistleblower status under the Act, while at the same time providing incentives for a whistleblower to consider first submitting the concern through internal channels.” Read more »

Corporate and Securities Alert: FAQs re Dodd-Frank Whistleblower Rules (Fenwick & West LLP)

“The Whistleblower Rules define the conditions that must be met for whistleblowers to be eligible for an award. They include provisions to protect whistleblowers from retaliation, and encourage (but do not require) whistleblowers to utilize a company’s internal reporting system.” Read more »

SEC Adopts Final Rules on Dodd-Frank Whistleblower Program (McDermott Will & Emery)

“Dodd-Frank also protects whistleblowers by providing them with a cause of action in cases where employers discharge or retaliate against them for reporting information (either internally or to the government) of possible securities law violations, and provides relief in the form of reinstatement, double-back pay and attorney fees. Unlike monetary awards, retaliation protections apply whether or not a successful enforcement action ultimately results.” Read more »

Final Dodd-Frank Whistleblower Rules Do Not Mandate Internal Reporting; May Dramatically Reshape FCPA Enforcement (Morgan Lewis)

“On May 25, 2011, a divided Securities and Exchange Commission (SEC) approved final rules to implement the SEC whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Because the SEC and the Department of Justice (DOJ) share responsibility for enforcing the Foreign Corrupt Practices Act (FCPA), the SEC’s whistleblower program is likely to dramatically reshape FCPA enforcement which, to date, has been heavily dependent on voluntary self-reporting by companies.” Read more »

New SEC Rules Pay Rewards to Whistleblowers (Armstrong Teasdale LLP)

“Of particular concern to companies is the fact that the new rules allow potential whistleblowers to bypass internal compliance programs and report directly to the SEC. The question of whether to require a potential whistleblower first to report to his or her company’s internal compliance program was a source of significant debate and the subject of heavy lobbying by companies during the rule-making process.” Read more »

SEC Announces Proposed Rules on Dodd-Frank Whistleblower Program(McDermott Will & Emery)

“On November 3, 2010, the U.S. Securities and Exchange Commission (SEC) issued proposed rules regarding the whistleblower provisions under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC’s proposed Regulation 21F defines critical terms, outlines procedures and generally explains the scope of its new whistleblower program. The proposed rules also address the important issue of whether whistleblowers should report suspected violations to their internal compliance and legal departments before making such reports to the SEC and how such internal reporting will affect their ability to receive a financial award under the program.” Read more »

The IRS Whistleblower Program (Duane Morris LLP)

“The recent turnover of Swiss bank account data highlights the role of whistleblowers in U.S. enforcement. There was the UBS banker, Bradley Birkenfeld, Tax Analysts’ 2009 person, whose whistleblowing brought the extent of offshore tax evasion to the attention of the Department of Justice and the Internal Revenue Service (IRS). As his reward for filing a claim with the IRS for a Whistleblower reward related to his disclosures, Birkenfeld was given a 40-month sentence for conspiring to commit tax fraud because of his counseling of UBS clients. Then, there was Rudolf Elmer, manager of the Caribbean operations of Julius Baer, who turned over information on more than 2,000 undeclared foreign bank accounts to WikiLeaks. It is still too early to tell whether Elmer and Birkenfeld will receive whistleblower awards, but if they do, they stand to be awarded billions of dollars.” Read more »