November 30, 2022

Volume XII, Number 334


November 29, 2022

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November 28, 2022

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SEC Adopts Amendments to Whistleblower Program Rules

On August 26, 2022, the U.S. Securities and Exchange Commission announced that it had adopted two amendments to its whistleblower program rules proposed earlier this year (see our post here).

The first amendment allows whistleblowers who would have been eligible for an award under another whistleblower program that would not give them as high an award as under the SEC’s program—such as the whistleblower programs run by the Commodity Futures Trading Commission (CFTC) or the Internal Revenue Service (IRS)—to receive an award from the SEC.  Under the previous version of the final rule adopted on September 23, 2020 (see our post here), whistleblowers were not eligible for awards under the SEC’s whistleblower program if the SEC determined that some other award program more appropriately applied.

The second amendment affirmed the SEC’s authority to consider the dollar amount of a potential award for the limited purpose of increasing an award, but not to lower an award.  Under the previous version of the rule, the SEC retained discretion to make downward adjustments to award amounts in excess of $5 million.

In announcing the new amendments, Chair Gensler noted:

Today’s amendments enact two changes to help enhance the whistleblower program.  The first amendment expands the circumstances in which a whistleblower who assisted in a related action can receive an award from the Commission for that related action rather than from the other agency’s whistleblower program.  Under the second amendment, when the Commission considers the size of the would-be award as grounds to change the award amount, it can do so only to increase the award, and not to decrease it.  I think that these rules will strengthen our whistleblower program.  That helps protect investors.

The SEC also published a fact sheet summarizing the whistleblower rule amendments, which will become effective 30 days after publication in the Federal Register.

These amendments are likely to result in increased tips to the SEC and larger payouts to successful whistleblowers.

© 2022 Proskauer Rose LLP. National Law Review, Volume XII, Number 249

About this Author

Steven J Pearlman, Labor Employment Law Firm, Proskauer Law firm

Steven Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm's Whistleblowing & Retaliation Group, resident in the Chicago office. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination and harassment, wage-and-hour laws and breaches of restrictive covenants (e.g., non-competition agreements). He has successfully tried cases to verdict before judges and juries in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S....

Pinny Goldberg Labor and Employment Lawyer Proskauer Rose Law Firm

Pinny Goldberg is an associate in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, wage and hour, wrongful discharge, whistleblowing and retaliation, covenants not to compete, breaches of fiduciary duty, unjust enrichment, and tort and contract claims.