Compliance Today (December 2020)

On September 23, the United States Securities and Exchange Commission (SEC) published its final rule^[1] on several questions regarding the agency’s whistleblower program. Among the rulings were a rejection of a change that would have limited payouts on very large fraud cases, the removal of all internal whistleblower protections offered by the SEC, and a restriction of “related action” cases in which whistleblowers could receive rewards from more than one agency.

The final rule has been expected for at least two years, during which the SEC debated and heard comments on all of the proposed rule changes. Lawyers with the firm Kohn, Kohn & Colapinto have been following the case and put together primers^[2] on the proposed rule changes, as well as comments^[3] on the final rule.

“‘Whistleblowers scored a major victory today when the SEC backed down from two proposals that would have devastated its whistleblower reward program,’” said Stephen Kohn, a leading whistleblower attorney. “‘The Commission did not approve proposals that would have triggered an automatic reduction in the amount of rewards issued in large enforcement actions. However, the dissents of Commissioners Lee and Crenshaw demonstrate that significant issues remain that could impact the program.’”

1 Securities and Exchange Commission, “Whistleblower Program Rules,” Release No. 34-89963, https://bit.ly/3jhNatJ.
2 Stephen M. Kohn, “The SEC Whistleblower Rule Changes Explained,” The National Law Review, September 23, 2020, https://bit.ly/3kgLulf.
3 “SEC Approves Changes to Whistleblower Program, Rejects Major Anti-Whistleblower Provisions,” Kohn, Kohn & Colapinto LLP, last accessed October 20, 2020, https://bit.ly/2IPjqYB.

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