The Securities & Exchange Commission strengthens its whistleblower program with new changes

The Securities and Exchange Commission has added two amendments to its whistleblower program. The first allows the Commission to pay whistleblowers for their information and assistance in connection with non-SEC actions in additional circumstances. The second affirms the Commission’s authority to consider the dollar amount of a potential award for the limited purpose of increasing an award but not lowering an award.

The SEC amended Rule 21F-3 to allow the Commission to pay whistleblower awards for certain actions brought by other entities, including designated federal agencies, in cases where those awards might otherwise be paid under the other entity’s whistleblower program. The amendments allow for such awards when the other entity’s program is not comparable to the Commission’s program or if the maximum award that the Commission could pay on the related action would not exceed $5 million.

The amendments affirm the Commission’s authority under Rule 21F-6 to consider the dollar amount of a potential award for the limited purpose of increasing the award amount, and it would eliminate the Commission’s authority to consider the dollar amount of a potential award to decrease an award.

The SEC’s whistleblower program was established in 2010 to encourage individuals to report high-quality tips to the Commission, help the agency detect wrongdoing, and better protect investors and the marketplace. The program has significantly contributed to the agency’s enforcement of federal securities laws. Since the program’s inception, enforcement matters brought using original information from meritorious whistleblowers have resulted in orders for more than $5 billion in total monetary sanctions. The Commission has awarded more than $1.3 billion to meritorious whistleblowers under the program.

Jeffrey Newman is a whistleblower lawyer with the firm Newman & Shapiro and can be reached at 617-823-3217 or Jnewman@NewmanShapiro.com.