SEC stays on mission, resists pressure to water down whistleblower protections


Most of the comments on the Securities and Exchange Commission proposed rulemaking mandated by the Dodd-Frank Act's whistleblower provisions provided by the members of the bar representing public companies opposed the right of a whistleblower to file an enforcement tip directly with the SEC and be covered by the Act's retaliation protective provisions and cash award ("bounty") provisions in situations where an internal whistleblowing system was available.

While the concern of employers about greedy disgruntled employees rushing to the SEC to air unfounded complaints is valid, so are the interests of employees who may rightfully in any given situation be concerned that their livelihood and even personal safety could be put at risk if they were to be required to pursue an internal procedure. And whistleblowers may not be confident that their employer will be positioned to take action promptly to avoid ongoing or future losses by investors.

In this blog post, Indianapolis attorney Mark Barnes contends that, as the "investor's advocate," the SEC stayed true to its mission in adopting the final rules on May 25, 2011, by retaining the right of a whistleblower to proceed directly to the SEC and still be eligible to claim whistleblower status under the Act, while at the same time providing incentives for a whistleblower to consider first submitting the concern through internal channels.

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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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