On August 26, the U.S. Securities and Exchange Commission (SEC) adopted two amendments to the rules of its highly successful whistleblower program. The amendments, which were widely supported by whistleblower advocates, allow the agency to better award whistleblowers who voluntarily provide the agency with original information that leads to successful enforcement actions.
“The SEC hit a home run. The investors, the taxpayers, and the public are the biggest winners today,” said whistleblower lawyer Stephen M. Kohn, a partner in the firm of Kohn, Kohn and Colapinto.
The first amendment alters a 2020 rule change which added language stating that the SEC has the discretion to consider the dollar amount of an award making an award determination. The new amendment clarifies that the agency only has this authority in instances where it is increasing the amount of an award, not in instances where it is decreasing an award size.
“The Commission ensured that whistleblowers who turn in the biggest frauds will not be penalized by having their rewards reduced. As the Commission understood, paying large awards in the biggest fraud cases will have a deterrent effect on Wall Street,” Kohn said.
The second amendment concerns the agency’s payment of related action awards, awards issued by the SEC when a whistleblower’s information is used by another agency in a successful enforcement action. The rule change allows whistleblowers to qualify for related action awards even if the other agency...
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