SEC Adopts Final Rules on Dodd-Frank Whistleblower Program


On May 25, 2011, the U.S. Securities and Exchange Commission (SEC) adopted final rules (the "Rules") for the expanded whistleblower program established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Dodd-Frank directed the SEC to adopt regulations to provide payment of awards to eligible individuals for reporting violations of federal securities laws to the federal government. Specifically, Dodd-Frank requires the SEC to award qualifying whistleblowers a bounty of 10% to 30% of the aggregate money over a $1 million threshold recovered by the SEC in eligible actions resulting from original information provided to the SEC by the whistleblowers. The Rules take effect on August 12, 2011. The Rules raise some challenging issues, perhaps the most significant being the impact on existing compliance and corporate governance procedures. Listed entities may be concerned that their compliance programs will be bypassed by whistleblowers who now have strong incentives to place their personal interests ahead of loyalties to their employers.

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Published In: Labor & Employment 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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