HomeStatement of Stephen M. Kohn on SEC Rule Changes

Statement of Stephen M. Kohn on SEC Rule Changes

The following statement was issued by Stephen M. Kohn, the Chairman of the Board of Directors of the National Whistleblower Center, in response to the U.S. Securities and Exchange Commission’s publication on August 5, 2021 of a “Statement” changing the interpretation of two major rules governing the SEC’s highly successful whistleblower reward program:

“The Policy Statement issued by the SEC on August 5, 2021 is a home run for whistleblowers. Problems that were caused during an extensive 2020 SEC rulemaking process are being fixed.”

“Chairman Gensler is honoring his word. During the confirmation process he pledged support for the SEC whistleblower program. He repeated this support in his first public remarks on the Dodd-Frank Act reward program during the Whistleblower Day celebrations.”

“Through this Procedural Statement, the SEC is ensuring that Congress’ mandate that “related action” awards are paid to whistleblowers. Related action awards occur when a whistleblower’s original information is used by agencies other than the SEC to hold fraudsters accountable. The provision is a key part of the Dodd-Frank Act as it incentivizes whistleblowers to fully cooperate with law enforcement agencies other than the SEC. In this way, wrongdoers who violate multiple laws can be held fully accountable.”

“Under the prior rule, the SEC claimed it had the authority to deny related action awards in numerous instances impacting money laundering, bank fraud, foreign bribery, illegal timbering, illegal imports of protected fish and endangered species, among other crimes. This Statement fixes a gaping hole driven into the whistleblower program in September 2020.”

“The Statement also clarifies that the amount of a whistleblower reward should not be considered when the SEC provides compensation to a whistleblower. This is a recognition of the critical deterrent effect large awards have on Wall Street fraudsters.”

“The SEC has done the right thing in protecting its highly successful program from administrative abuses.”

Read the SEC Policy Statement

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