The Chair of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, announced the SEC is preparing to amend the rules governing the Commission’s highly successful Whistleblower Program.
“This is a major step forward for accountability,” said SEC whistleblower attorney Stephen M. Kohn, partner at Kohn, Kohn & Colapinto, who also serves as the Chairman of the Board of Directors of the National Whistleblower Center. “The SEC program needs improvements to ensure that qualified whistleblowers are rewarded, and procedural roadblocks are removed. We welcome the Chairman’s commitment to effective whistleblower protection.”
According to Kohn, among the major fixes needed in the SEC’s program relate to the long delays in processing cases (often as long as 3-5 years after the SEC collects a sanction), and restrictions on the “related action” provisions of the law.
Related action awards incentivize whistleblowers to cooperate with other law enforcement agencies by permitting whistleblowers to obtain compensation when sister federal agencies sanction fraudsters based on the information provided to the SEC. Congress intended for awards to be paid in these circumstances.
“The current rules place restrictions on related action payments and radically undermines the public interest and creates a disincentive for whistleblowers to fully cooperate with all responsible law enforcement agencies,” Kohn added.
Since issuing its first award in 2012, the SEC Whistleblower Office has awarded approximately $946 million to 190 individuals.
Later this year, the SEC is set to vote on these proposed amendments.
“We must ensure that whistleblowers are empowered to come forward when they see misbehavior,” Gensler said in his keynote address at National Whistleblower Day 2021. “That they are appropriately compensated according to the framework established by Congress; and that those who report wrongdoing are protected from retaliation.