Yesterday, we submitted comments to the Securities and Exchange Commission in response to the Commission’s recently announced proposal to amend the rules governing the SEC Whistleblower Program. Here’s a link to the SEC’s proposal.

In our letter we commended the SEC for its recognition that the Whistleblower Program has been an extraordinary success and has contributed significantly to the Enforcement Division’s fight against fraud and other wrongdoing, and we expressed our support for the proposed changes that build on the program’s successes and address areas in demonstrated need of improvement. These include changes that improve the efficiency of the intake and award-making processes and provide clear answers to questions concerning eligibility to participate in the program. These changes are consistent with Congress’s intent to encourage whistleblowers to bring meritorious cases to the attention of the Commission’s enforcement personnel.

At the same time, we expressed our concern that the proposed limits to award payouts threaten to undermine this same central element of Congress’s clear intent when it enacted the Whistleblower Program in 2010: the creation of incentives for a broad pool of potential whistleblowers to come forward and report wrongdoing. Accordingly, we opposed those proposed rules that would inject unnecessary ambiguity into the operation of the Whistleblower Program because they would create uncertainty and drive potential whistleblowers away, causing many who might otherwise have come forward with meritorious cases to decline to participate in the program.

You can read our full submission to The Securities and Exchange Commission here.

Below is a quick summary of some the points we raised:
• Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs) More

• Alternate Proceedings More

• The Definition of “Monetary Sanctions” More

• Proposal to bar a whistleblower’s recovery from the SEC where there is a potential related action that is arguably more closely related to another whistleblower program More

• Proposal to allow the Commission to limit awards in large cases More

• Guidance making a delay beyond 180 days “unreasonable” More

• Reporting and Retaliation Provisions More

• Updating Forms More

• Barring frivolous claimants More

Requiring the submission of TCR forms no later than 30 days after initially contacting SEC More

• Limiting the CRS record to timely submissions and/or submissions made in response to requests by the Office of the Whistleblower More

• Summary disposition process More

• Proposed guidance on “Independent Analysis” More

• Discretionary Award process More

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