Securities and Exchange Commission Rulemaking

Kohn, Kohn & Colapinto’s partners met personally with each of the five SEC Commissioners. They presented them with detailed reports and proposals setting forth rules that were essential to make the law work for Dodd-Frank whistleblowers as intended by Congress.

SEC Dodd-Frank Rulemaking 2010-11

Rules ensuring SEC whistleblowers are protected and awarded

KKC emerged as pioneering advocates for whistleblowers following the enactment of the Dodd-Frank Act in July 2010. They collaborated closely with the SEC staff to propose impactful regulations. Throughout the rulemaking process, KKC distinguished themselves as the foremost champion for whistleblower rights. They engaged directly with all five SEC commissioners and submitted a greater volume of comments than any other law firm or advocacy group specializing in whistleblower cases.

As a result of these efforts, several significant proposals were adopted. Key among these were the ban on restrictive non-disclosure agreements, empowering whistleblowers to report misconduct directly to the SEC, and extending eligibility for rewards to participants in misconduct, provided they were not the principal perpetrators. These measures have greatly enhanced the effectiveness of whistleblower protections.

During this period, KKC attorneys were the principal authors of eight key comments to the SEC:

May 16, 2011 – letter to SEC Chairman Schapiro and CFTC Chairman Gensler regarding the impact of the first reported decision under the Dodd-Frank Act on the rulemaking process
March 17, 2011 – letter to SEC with provision-by-provision analysis of proposed rules with suggested revisions and justifications for revisions
March 7, 2011 – letter to Chairman Schapiro responding to Chamber of Commerce’s attacks on the NWC’s December 17, 2010 report.
February 10, 2011 – letter to Commissioners explaining the proposed rules’ impact on the ability of US to enforce the Foreign Corrupt Practices Act.
January 25, 2011 – letter to Chairman Schapiro applying Chevron to proposed rules, and a marked-up version of proposed rules.
December 17, 2010 – formal rulemaking letter with report to the SEC on the Impact of Qui Tam Laws on Internal Compliance.
November 22, 2010 – letter to SEC Chairman Schapiro explaining that proposed rules violate congressional intent.
November 1, 2010 – letter to SEC opposing corporate lobby position.

The final rules were approved and enacted on May 25, 2011 in a 3:2 vote.

SEC Rulemaking Proceeding 2018-20

Proposal to limit to the size of whistleblower rewards

Kohn, Kohn & Colapinto spearheaded the campaign against the imposition of an arbitrary cap on whistleblower rewards. Demonstrating their commitment, KKC filed the most extensive set of comments with the five SEC commissioners, including the chair, on numerous occasions. Their engagement extended to the commission’s responsible staff as well.

The SEC had initially proposed capping rewards, but, significantly influenced by KKC’s persuasive advocacy, this proposal was eventually retracted. This marked a substantial victory for whistleblowers. The final decision against capping rewards was unanimous, not only safeguarding the integrity of the Dodd-Frank Act program but also setting a powerful precedent against limits on whistleblower awards.

KKC filed the following comments to the Amendments to the Commission’s Whistleblower Program Rules:

2022 Amendments to SEC Whistleblower Program Rules

On February 10, 2022, the SEC announced two proposed amendments to the rules governing its highly successful whistleblower program. Both proposed amendments address issues raised by rule changes passed in 2020 and aim to ensure that qualified whistleblowers are properly rewarded.

The attorneys of KKC support the SEC’s proposed amendments and are working to voice support and offer guidance on the best ways to properly implement the changes.

In particular, The attorneys of KKC have already filed comments supporting the proposed change to the rules on the payment of related action awards. A 2020 rule change allows the SEC to deny a related action award if the related action could be covered by another whistleblower reward law. As explained in one of KKC’s filings to the SEC, this runs counter to the statutory language of the Dodd-Frank Act and creates unjust hardship for whistleblowers.

The attorney’s of KKC look forward to continually to work closely alongside the SEC to ensure the SEC Whistleblower Program remains the gold-standard of whistleblower award programs.

April 8, 2022

KKC sent a letter to the SEC reaffirming their support for the agency’s proposed rule changes. The letter cites to academic literature and public comments by government officials to show that the proposed rules “will significantly enhance the public interest, protect investors, and promote efficiency, competition, and capital formation within the securities markets.” KKC also offered detailed answers to a number of questions posed by the SEC relating to the proposed rule changes.

March 28, 2022

KKC sent a letter to the SEC voicing their support for the SEC’s proposed amendment to the agency’s related action rules. In the letter, KKC details why the current related action rule needs to be amended, explaining that as is the rule violates the law and disincentivizes whistleblowers. In addition, KKC endorsed one of two options set forth by the SEC for the rule change and offered some suggested changes to the amendment.