Latest on Dodd-Frank’s Whistleblower Rules


Section 21F of the Securities Exchange Act of 1934 (the Exchange Act), which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank), directs the SEC to provide monetary awards to whistleblowers, subject to certain conditions and limitations, who voluntarily provide original information relating to a violation of the securities laws that leads to a successful enforcement action resulting in the imposition of over $1 million in monetary sanctions. Awards are to be made in amounts between 10 percent and 30 percent of the monetary sanctions, depending on factors set forth by the SEC.

According to the SEC, it has received 334 whistleblower tips since August 2011, when the SEC’s final rules implementing Section 21F became effective. The most common complaint categories were market manipulation (16.2 percent), corporate disclosures and financial statements (15.3 percent) and offering fraud (15.6 percent). The SEC already has set aside $452 million for whistleblower compensation. Although no whistleblower awards have been announced to date, the SEC’s Office of the Whistleblower has posted notice of over 200 applicable enforcement judgments and orders issued from July 21, 2010 (when Dodd-Frank became law) through December 1, 2011. The expectation is that the first awards will be made early in fiscal year 2012.

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Published In: Administrative Agency Updates, Business Organization Updates, Civil Procedure Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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