Fraud Whistle-Blowers Can Go Straight to SEC

     WASHINGTON (CN) – Whistle-blowers at financial services firms may report suspected fraud directly to the Securities Exchange Commission, and collect financial incentives offered by the agency, according to new rules.




     When the SEC first proposed the whistle-blower program, it asked for public comment on whether whistle-blowers first should have to report through their firm’s internal securities law compliance system.
     The SEC was concerned that allowing direct reporting would weaken internal compliance programs and over burden the SEC staff.
     To encourage potential whistle-blowers to use internal reporting programs, the SEC will consider lowering the amount of cash awarded for information leading to a successful enforcement action if the whistle-blower did not first report their concerns internally.
     To make awards available in more cases, the SEC has decided to aggregate reports from the same whistle-blower that result in successful enforcement actions, to reach the $1 million threshold at which cash awards are made.
     Other changes from the SEC’s original proposal include an extension to 120 days of the amount of time a whistle-blower has to report concerns to the agency if an internal compliance program fails to address the whistle-blower’s allegations, and a streamlined reporting process that requires whistle-blowers to fill out just one form when reporting allegations.
     The rule excludes corporate officers, lawyers, auditors and other compliance personnel from collecting financial awards for blowing the whistle on companies they work for, or clients they advise, when they suspect federal securities law violations.
     The new rules amend the Securities Whistleblower Incentives and Protection program mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
     Click on the document icon for this regulation and others.

%d bloggers like this: