The U.S. Securities and Exchange Commission (SEC) is scheduled to meet at 9 a.m. on September 23 to vote on proposed amendments to its highly successful whistleblower program. Whistleblower advocates warn that, if approved as originally written, a number of the proposed rules would significantly undermine the efficacy of the whistleblower program.
The proposed changes were first introduced in 2018 and since then, the SEC has twice canceled a vote on them. Whistleblower advocates, ranging from whistleblower attorneys to Senators, have been outspoken in critiquing a number of the rules. Over 100,00 comments, emails, and petitions were filed with the SEC opposing these changes.
The proposed rules which whistleblower advocates have deemed the most detrimental to the program include a rule that would strip the SEC of the authority to protect internal whistleblowers, a rule that would implement a “soft cap” on the largest whistleblower awards, and a rule that would establish a procedural roadblock in filing for whistleblower awards that would automatically disqualify a vast number of otherwise qualified whistleblowers.
Stephen M. Kohn, a partner in whistleblower law firm Kohn, Kohn & Colapinto, and Chairman of Board of Directors of National Whistleblower Center, has been an outspoken critic of these proposed changes. He, alongside other leading whistleblower attorneys and advocates, has also met with SEC officials on multiple occasions to discuss the proposed amendments. Following the SEC’s announcement of the rescheduled vote, he released a statement saying “We urge the SEC to unanimously support its whistleblower program and use this rulemaking as an opportunity to improve its program. All of the initial proposals that would have undermined whistleblower protections should be voted down.”
As currently constructed, the SEC Whistleblower Program has proven to be highly successful. The SEC itself has acknowledged the “paramount role the SEC’s whistleblower program plays in safeguarding the Main Street investor.” The SEC backed up this claim by explaining that, since the whistleblower program was established in 2010, it “has ordered more than $2.5 billion in financial remedies based on whistleblower information, including more than $1.4 billion in disgorgement and prejudgment interest, of which almost $750 million has been returned or is scheduled to be returned to harmed investors.”