On Thursday April 7, National Whistleblower Center (NWC) submitted a formal comment to the SEC regarding proposed amendments to the SEC’s whistleblower program, released on February 10, 2022.
In the comment, NWC expressed strong support for the Commission’s proposed amendments as they reflect needed improvements and corrections to outstanding issues in the September 2020 amendments. Specifically, the amendments would remedy concerns about arbitrary award caps and denials raised by NWC in comments on the Commission’s previous rulemaking.
NWC is pleased the Commission is seeking to fix the Related Action Rule to avoid the denial of a Dodd-Frank Act whistleblower award due to the existence of an alternative whistleblower program. In the September 2020 amendments to its whistleblower program, the SEC limited whistleblower award eligibility for related actions in circumstances where an alternative whistleblower program has the more “direct or relevant connection to the [non-Commission] action.”
As NWC argued in earlier comments, the 2020 rule would discourage whistleblowers from cooperating across agencies with confidence. NWC is encouraged that the SEC revisited this amendment and seeks to further modify and clarify it so whistleblowers will receive a mandatory award not “meaningfully lower than the maximum amount the Commission could award to that whistleblower on that same action.” The adoption of this rule would ensure that any whistleblower eligible for an SEC award would be sheltered by the critical mandatory 10-30% award provisions of the Dodd-Frank Act and not be penalized for cooperating with other enforcement agencies.
When enacting the 2020 Amendments to the whistleblower program, the Commission asserted that it had the discretion to consider the dollar amount of an award when making an award determination. During the 2020 whistleblower rulemaking process, NWC submitted numerous objections to the proposed limitation on award determinations based on award size. NWC is pleased that the Commission’s proposed amendments to Rule 21F-6 directly address these concerns. Specifically, the proposed rules the Commission “shall not” use the dollar amount of a potential award as a basis to lower an award and may only consider the dollar amount of an award to increase it.
NWC has consistently championed whistleblowers and the power of rewarding them. We commend the Securities and Exchange Commission and thank the Commissioners for their commitment to a successful whistleblower program and for having the courage to make these much needed improvements.
NWC Executive Director Siri Nelson is available for comment. For more information, contact NWC at info@whistleblowers.org.
