WASHINGTON (CN) – Lawyers, auditors and other compliance personnel would be excluded from collecting financial awards for blowing the whistle on companies they work for, or clients they advise, when they suspect federal securities law violations, according to new rules proposed by the Securities and Exchange Commission.
The agency’s proposed rules are to implement amendments made by the Dodd-Frank Wall Street Reform and the Consumer Protection Act to the Securities Exchange Act to include whistleblower awards for information that leads to successful enforcement actions resulting in sanctions against perpetrators of more than $1 million.
The exclusion focuses on groups with established professional obligations in securities law compliance.
Employees that suspect their employers of securities law violations will be encouraged to report their concerns first to their own compliance officers, by provisions that qualify these informants for whistleblower status and awards if the company fails to address their concerns and is later subject to enforcement actions.
To deter false submissions, the proposed rules require that information provided by whistleblowers be submitted under penalty of perjury. In addition, anonymous whistleblowers must be represented by counsel, who must certify to the commission that they have verified the whistleblower’s identity.
The SEC is seeking public comment on the proposed rules.
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