SEC Issues Proposed Dodd-Frank Whistleblower Rules
In November, 2010, the SEC released a 181-page set of proposed rules for the execution of the new whistleblower provisions enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which encourage whistleblowers to report violations to the SEC by offering payments for information. Any individual, or individuals, who provide(s) information relating to a violation or potential violation of the securities laws to the SEC is a whistleblower. Certain individuals, however, are barred from receiving compensation for supplying information to the SEC. Those individuals convicted of crimes related to the violation, individuals who discovered the information by completing audits of financial statements, and those who knowingly provide false, fabricated, or fraudulent information are some excluded from receiving a bounty.
Although the whistleblower would have to disclose his or her identity before receiving the reward, the SEC will not reveal the identity. There may be some concern as to the "limited circumstances" in which the whistleblower's identitiy could be disclosed, however, as it could be by a defendant in an SEC initiated federal court action or adminsitrative action - thereby making identity disclosure forseeable. Also, the SEC would be allowed to directly communicate with the whistleblower and the proposed rules would prevent any individual from impeding communication between the two.
To learn more about the proposed rules, visit SEC Proposes New Whistleblower Program Under Dodd-Frank Act.
If you have any questions or would like more information about employee communication tools and training to benefit your business, please contact Wood, Atter & Wolf, P.A., in Jacksonville and Ponte Vedra Beach, Florida.
