Yesterday, the Securities and Exchange Commission released a 181-page set of Proposed Rules for the implementation of the new, robust whistleblower provisions enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).1 The provisions encourage whistleblowers to report violations of the securities laws to the SEC by offering bounties for information leading to successful enforcement actions.

The fact that the SEC acted unanimously and quickly in crafting this comprehensive proposal — well in advance of the April 2011 deadline to issue final regulations — suggests that it perceives the new whistleblower provisions as an important part of its enforcement toolkit. Recent blockbuster whistleblower payouts, including last month’s $96 million bounty awarded to a pharmaceutical company’s former employee under the False Claims Act,2 have reinforced concerns about the new whistleblower bounty provisions and their potential impact on the business community. The issuance of these Proposed Rules comes days after the SEC’s announcement that it has set aside a fund of $452 million for anticipated whistleblower claims.3

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