The SEC’s new whistleblower program is attracting far fewer tips than expected, despite richer rewards, just 168 complaints alleging corporate fraud in the first 6½ months of the program’s existence, a lot less than expected by Steven Kohn, executive director of the National Whistleblowers Center. (SEC Whistleblower Call Draws Few Tipsters, Kaja Whitehouse, New York Post. February 23, 2011 via Stanford Law School’s Securities Class Action Clearinghouse.
One problem might be that few potential whistleblowers know about the program. Here’s some basic information from the SEC website:
On July 21, 2010, the President signed into law the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (the “Act”). Among other things, the Act establishes a whistleblower program that enables the Securities and Exchange Commission to pay an award, under regulations prescribed by the SEC and subject to certain limitations, to eligible whistleblowers who voluntarily provide the SEC with original information about a violation of the federal securities laws that leads to the successful enforcement of a covered judicial or administrative action, or a related action, as defined by the Act.
The SEC has 270 days from the date of enactment to issue final regulations implementing the whistleblower program and is in the process of preparing a rule proposal. Compliance with the regulations will be a prerequisite to an award, so please check back for information concerning the regulations if you wish to be considered for an award.
The Act provides that “information provided to the Commission in writing by a whistleblower shall not lose the status of original information . . . solely because the whistleblower provided the information prior to the effective date of the regulations, if the information is provided by the whistleblower after the date of enactment.” If you wish to submit information regarding a potential violation of the federal securities laws, please use our online form. If you do not want to submit the information electronically, our address is: SEC, 100 F Street NE, Washington, D.C. 20549-5631. You may also send a fax to 202-772-9235.
The Act expressly prohibits retaliation by employers against individuals who become whistleblowers under SEC rules and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act. In addition, OSHA’s Office of the Whistleblower Protection Program continues to administer the whistleblower protection provisions under the Sarbanes Oxley Act of 2002.
You can also easily find attorney’s looking to help whistleblowers file by doing a Google search on something like SEC whistleblower program need lawyer. More likely, maybe federal securities laws are no longer being violated, or maybe potential whistleblowers just don’t know they can be entitled to a 10%-30% share of anything the SEC recovers over $1 million, based on their tips to the SEC that find firms caught breaking the law. Please help spread the word.