SEC Publishes Rule Changes to Whistleblower Program; New Deadlines Impact Current Cases

SEC Rules

On November 5, the Federal Register published the Whistleblower Program Rule changes for the U.S. Securities and Exchange Commission (SEC) Whistleblower Program. The SEC approved the changes on September 23 in a 3-2 vote by the SEC Commissioners. While the rule changes will go into effect on December 7, some individual rules are retroactive and establish new deadlines that are relevant to thousands of current cases.

“Whistleblowers and whistleblower law practitioners should carefully review the applicability dates of the various rule changes, as these deadlines may have a significant impact on pending or future cases,” said whistleblower attorney Stephen M. Kohn, a partner at qui tam firm Kohn, Kohn & Colapinto and Chairman of the Board of the National Whistleblower Center. “It is critical to understand that while the new rules impact SEC whistleblower cases filed after December 7, 2020, they also potentially affect all pending cases as many of the rules will be applied retroactively.”

The rule changes affect numerous aspects of the SEC whistleblower program – including the process of award determinations and the proper procedure for filing a whistleblower disclosure. Kohn previously penned the definitive analysis of the rule changes. While some individual rule changes are seen as negative by whistleblower advocates, the rule changes are largely seen as a win for whistleblowers.

The important information in the newly published final rule changes are not the rules themselves, as these were already known, but the applicability dates of the rules. In Section III of the published rules, the SEC outlines the applicability date for each individual rule change.

In a blog post for Kohn, Kohn & Colapinto, whistleblower attorney Mary Jane Wilmoth (the editor of Whistleblower Network News) explains some of the notable applicability dates:

“Whistleblowers must carefully follow the SEC rules, including all deadlines. The failure to follow these rules can result in a reduction in a reward, or even the complete disqualification of award eligibility,” Kohn said. “Whistleblowers should not leave money on the table.”

The new rule changes will go into effect as the SEC Whistleblower Program is off to a record-setting start to the 2021 fiscal year. Since the 2021 fiscal year began on October 1, the SEC has issued approximately $154 million to six whistleblowers. In the 2020 fiscal year, the SEC issued whistleblower awards totaling approximately $175 million, the most in program history. The SEC is currently on pace to break that record within the first two months of this fiscal year.


Whistleblower Program Rules

SEC Publishes New Whistleblower Rules; Deadlines Impact Thousands of Cases

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