Security Exchange Commission (SEC) Rulemaking

Security Exchange Commission (SEC) Rulemaking

Experienced whistleblower attorneys work to ensure SEC whistleblowers protected and awarded 

During the Dodd-Frank rulemaking process, Kohn, Kohn and Colapinto’s partners worked closely with the SEC to create an effective whistleblower program.

Kohn, Kohn & Colapinto’s partners met personally with each of the five SEC Commissioners. They presented them with detailed reports and proposals setting forth rules that were essential to make the law work for Dodd-Frank whistleblowers as intended by Congress.
The SEC adopted the key recommendations for enhancing its Whistleblower Reward Program advocated by KKC partners. 
The SEC approved these proposals:

  • establishing the right of corporate compliance officials and directors to obtain rewards; and
  • ensuring that employees who “participated” in fraud but did not “plan and initiate” the fraud, could receive rewards.

KKC attorneys chaired formal meetings with the Division of Enforcement, and individual meetings with each SEC Commissioner to present detailed reports and proposals setting forth rules that were essential to make the Dodd-Frank Act work as intended by Congress.

During this period, KKC attorneys were the principal authors of eight key comments to the SEC:

  • November 1, 2010 letter to SEC opposing corporate lobby position.
  • November 22, 2010 letter to SEC Chairman Schapiro explaining that proposed rules violate congressional intent.
  • December 17, 2010 formal rulemaking letter with report to the SEC on the Impact of Qui Tam Laws on Internal Compliance.
  • January 25, 2011 letter to Chairman Schapiro applying Chevron to proposed rules, and a marked-up version of proposed rules.
  • 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 attacks on 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 SEC Chairman Schapiro and CFTC Chairman Gensler regarding the impact of the first reported decision under the Dodd-Frank Act on the rulemaking process

The final rules were approved and enacted on May 25, 2011 in a 3:2 vote.

Recently the SEC has proposed new rules that would gut its whistleblower program. 

The proposed rules would: 

  • Creating an unrealistic reporting procedure that would disqualify a vast number of whistleblowers simply because they reported their concerns to the wrong office at the SEC, rather than filling out a specific form and filing it according to specific reporting procedures. Whistleblowers who directly contact the SEC Commissioners would be disqualified from obtaining a reward!
  • Placing an arbitrary cap on whistleblower rewards, which could be imposed in large fraud cases, regardless of contribution of the whistleblower or the amount of retaliation the whistleblower suffers.  This cap would disincentivize whistleblowers from coming forward. 

Once again KKC’s whistleblower attorneys are leading the campaign to protect the SEC Whistleblower Program. 

KKC partners filed the following comments to the Amendments to the Commission’s Whistleblower Program Rules:

Dodd-Frank Act Whistleblower Letter filed on September 12, 2019

May 6, 2019 – Supplemental Comment on Proposed Amendment to Rule 21F-9(e) File Number S7-16-18

December 14, 2018 – Ensuring the Integrity of the Investor Protection Fund While Timely and Properly Paying Whistleblower Claims

December 17, 2018 – Stephen Kohn met with staff of SEC, discussed SEC’s Proposed Rule Amendments relating to the whistleblower program. 

September 18, 2018 – Proposed Rule File Number S7-16-18, Whistleblower Program Rules

July 24, 2018 – File No. S7-16-18, Amendments to the SEC’s Whistleblower Program Rules

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