Securities and Exchange Act Whistleblowers
Assessment of the SEC’s Bounty Program
The Whistleblower Blog
Securities Whistleblower Incentives and Protection 15 U.S.C Section 78-u-6 Law authorizing Payment of rewards (minimum 10% and maximum 30% for original information resulting in a successful enforcement action).
15 U.S.C. 78u-6(h) Dodd-Frank Anti-Retaliation provisions for Securities Trading Industry Whistleblowers.
17 C.F.R. part 240, 241, and 249.
SEC Comments Accompanying Final Whistleblower Rule
Securities and Exchange Commission, Whistleblower Award Orders.
2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program
2016 Annual Report to Congress on the Dodd-Frank Whistleblower Program
Legislative History and Background
In response to the financial crisis of 2008 Congress enacted the Dodd-Frank Act. That law contained breakthrough whistleblower protections, which significantly enhanced the ability of employees to successfully report financial frauds and violations of the Securities and Exchange Act. The most significant whistleblower protection enhancements were: whistleblower rewards under the Securities Exchange Act, the right to report securities violations anonymously and confidentially and strengthened anti-retaliation protections.
The Securities and Exchange Commission also wrote rules governing the whistleblower law, which ensured that compliance officials could file reward claims and prohibited corporations from enforcing broad nondisclosure agreements that limited the rights of employees to communicate with the Securities and Exchange Commission.
Provisions of Dodd-Frank directly related to Whistleblower Protection
Section 922 21F(a) qui tam for securities fraud: new qui tam rewards and incentives for whistleblowers who blow the whistle on securities violations 21F sub (H)(1) anti-retaliation provision for employees who file qui tam claims under securities law (H)(1)(A)(iii) anti-retaliation for employees who make disclosures under SOX, any violation of SEC art or who make protected disclosures under obstruction of justice act Claims filed in federal court – employees entitled to double back pay (B) statistical ratings organizations (Moody’s & Standard & Poor’s) now protected under SOX anti-retaliation provisions (C) SOX whistleblower protection act enhanced and amended to increase the statute of limitations, guarantee jury trials, and prohibit mandatory arbitration agreements.
Section 923 – Sarbanes-Oxley Act anti-retaliation Provisions.
Section 924 – SEC regulations to establish special whistleblower office and impose regulations enforcing whistleblower rules.
Section 929A – SOX anti-retaliation law is clarified to ensure subsidiaries of publicly traded companies are fully protected under the whistleblower protection law.
Section 1057 – New whistleblower protection for employees who make disclosures to the newly created consumer protection board.
Section 1079(c) – Amends the False Claims Act anti-retaliation law to provide for universal national 3 year statute of limitations to file wrongful discharge claims under the False Claims Act.
The SEC prohibits Non-Disclosure Agreements which prevent Whistleblowers from reporting to the Government
SEC Press Release (April 1, 2015)
SEC Enforcement Action (April 1, 2015)
Harry Barko’s February 19, 2014 complaint
Harry Barko’s Whistleblower Profile
Senate Report submitted by Senator Dodd, from the Committee on Banking, Housing and Urban Affairs, together with minority views.
The SEC’s rulemaking for the Dodd-Frank whistleblower protections as of June 13, 2011.
17 C.F.R. part 240 and 249.
Rewards for Compliance Officials
Kohn, The SEC’s Final Whistleblower Rules & Their Impact on Internal Compliance (West Law Publishing, Oct. 2011).
17 C.F.R. part 240.
The SEC Whistleblower Rewards Rulemaking
Stephen M. Kohn, Michael D. Kohn acting pro bono on behalf of the National Whistleblowers Center Meeting Notes with the SEC Commissioners
January 25, 2011 Meeting with Division of Enforcement
February 10, 2011 Meeting with Commissioner Aguilar
February 11, 2011 Meeting with Commissioner Paredes
February 15, 2011 Meeting with Commissioner Walter
March 11, 2011 Meeting with Commissioner Casey
March 28, 2011 Meeting with Chairman Schapiro
Rulemaking Comments written by Stephen M. Kohn which fully rebutted the Chamber of Commerce’s assault on the Dodd-Frank and were heavily relied upon by the Commissioners for the final SEC Whistleblower Rules
NWC Report to the SEC: “Impact of Qui Tam Laws on Internal Compliance”
November 1, 2010 – Letter to SEC opposing corporate lobby position, including comments from Baker Donelson and Arent Fox.
November 22, 2010 – Letter to Chairman Schapiro explaining that Proposed Rules violate Congressional intent.
December 17, 2010 – Formal rulemaking letter with report entitled “Impact of Qui Tam Rules on Internal Compliance”.
December 18, 2010 – Updated “Impact of Qui Tam Rules on Internal Compliance” with corrected links.
January 25, 2011 – Materials for NWC’s meeting with SEC Division of Enforcement: Letter to Chairman Schapiro appling Chevron to Proposed Rules, marked-up version of Proposed Rules, updated NWC reported “Impact of Qui TamRules on Internal Compliance”, 10 C.F.R. 50.7 marked-up, Federal Acquisition Regulations, and 48 C.F.R. 52.203-13 marked-up.
February 10, 2011 – Letter to Commissioners explaining the proposed rules’ impact on the ability of US to enforce the Foreign Corrupt Practices Act.
March 7, 2011 – Letter to Chairman Schapiro responding to Chamber of Commerce’s incorrect attacks of the NWC’s December 17, 2010 report.
March 17, 2011 – Letter to SEC with provision-by-provision analysis of proposed rules with suggested revisions and justifications for revisions.
May 16, 2011 – Letter to Chairman Schapiro and Gensler regarding the impact of the first reported decision under the Dodd-Frank Act on the rulemaking process.
Comments by Commissioners introducing Final Rules
Comments by Chairman Mary L. Schapiro
Comments by Commissioner Elisse B. Walter
Comments by Commissioner Troy A. Paredes
Comments by Commissioner Luis A. Aguilar
Comments by the Corporate Lobby
Baker Donelson letter – Representing corporate lobby position.
Arent Fox Letter – Representing corporate lobby position.
Chamber of Commerce Letter – Attacking the NWC’s report “Impact of Qui TamRules on Internal Compliance”.
Report: Assessment of the SEC’s Bounty Program (prior to Dodd-Frank)
Assessment of the SEC’s Bounty Program, U.S. Securities and Exchange Commission, Office of Inspector General, March 29, 2010
The Securities and Exchange Commission’s Annual Reports on the Dodd-Frank Whistleblower Protection Program
Annual Report 2011
Annual Report 2012
Annual Report 2013
Annual Report 2014
The SEC Office of the Whistleblower.
Securities and Exchange Commission Notices of Pending Whistleblower Rewards.
Securities and Exchange Commission Decisions on Whistleblower Reward Claims.
The law Librarian’s Society of Washington, DC’s summary of the legislative history, complete with links, reports and summaries.
David Colapinto explains how, years after Dodd-Frank, financial reform is still under attack.