HomeSEC Commission Will Vote on Radical Changes to the Wall Street Whistleblower Law On October 23, 2019

SEC Commission Will Vote on Radical Changes to the Wall Street Whistleblower Law On October 23, 2019

Proposed Changes to the Dodd-Frank Act Whistleblower Law Will Destroy Key Protections 

Washington D.C. October 18, 2019. The U.S. Securities and Exchange Commission (“SEC” or “Commission”) will meet at 10 a.m. on October 23, 2019, to vote on proposed changes to the SEC’s highly successful Dodd-Frank Act whistleblower reward program. If approved, the proposed changes will destroy vital Wall Street whistleblower protections, undermine the whistleblower reward law, and place investors at significant risk to be harmed by increased frauds. 

The whistleblower rights law firm of Kohn, Kohn and Colapinto has taken a leadership role in trying to convince the SEC Commissioners to reject all of the anti-whistleblower proposals. Over the past week, whistleblower attorneys from the firm have met with members of the Commission and their staffs. Joining the KKC attorneys at these meetings were representatives from the National Whistleblower Center and ENRON whistleblower/Time Magazine Person of the Year Sherron Watkins

KKC partner Stephen M. Kohn met directly with Commissioners Robert J. Jackson, Jr., Allison Herren Lee, and Hester M. Peirce, and with the staffs from Chairman Jay Clayton and Commissioner Elad L. Roisman on October 9-10, 2019 to discuss the proposed changes. 

“The Commissioners and their staffs were open to hearing our concerns. We sincerely hope that the Commission does not approve the rules as originally proposed. The changes will cause untold harm to whistleblowers and undermine the current SEC program,” stated Kohn. 

“We are particularly concerned over two proposed rules. The first would disqualify numerous whistleblowers who contact the Commission with highly valuable information on securities frauds. The second would disincentivize highly placed executives from blowing the whistle on major frauds by reducing the amount of compensation in large fraud cases,” Kohn said. 

“It is not surprising that Wall Street strongly supports the radical re-writing of the Dodd-Frank Act. Since the law was passed, Wall Street has heavily lobbied to strip the SEC whistleblower law of its most vital components,” Kohn added. 

The success of the current program is highlighted in the 2018 SEC Whistleblower Office’s Annual Report. Since 2011, the SEC has recovered over $1.7 billion in sanctions from fraudsters in whistleblower cases and paid the whistleblowers over $325 million in awards.  

The importance of incentivizing whistleblowers was affirmed by the former Chairman of the Commission, Mary Jo White, in Remarks at the Securities Enforcement Forum:

“[Whistleblower rewards] persuade people to step forward.

“They put fraudulent conduct on our radar that we may not have found ourselves, or as quickly.

“And they deter wrongdoing by making would-be violators ask themselves – who else is watching me?

“The program also incentivizes companies to report misconduct before a whistleblower comes to us first.

“We believe this program is already a success. And, as more awards are made, we expect more people to come forward, which will dramatically broaden our presence.”

“If approved, the proposed rules will undermine the most successful program protecting investors from frauds. We hope the new Commissioners, appointed by President Trump, will reject every pending proposal that will undermine the program,” Kohn said. 

More Information: 

The SEC’s Notice of Public Meeting to vote on the proposed rules is linked here.

Kohn, Kohn and Colapinto detailed rulemaking comments on the proposed Dodd-Frank Act whistleblower reward program:

National Whistleblower Center and Senator Grassley Letters to SEC on the Proposed Rule:

Speech of former SEC Chairman Mary Jo White, “The SEC as the Whistleblower’s Advocate. ” 

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Photo Credit Scott S.

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