Corporate Governance

The Wall Street Reform Act's "New and Improved" Whistleblower Provision

By Jim Hodgson

On July 15, the Senate voted to adopt the Dodd-Frank Wall Street Reform and Consumer Protection Act.  President Obama signed the Act into law a week later.  One provision of particular interest amends the Securities Exchange Act of 1934 to provide new financial rewards for whistleblowers.  By providing ?original information? to the SEC that leads to a successful enforcement action which recovers at least $1 million, whistleblowers stand to earn upwards of 30% of the recovery.  And they are now guaranteed at least 10% ? the old statutory maximum, which applied only in connection with limited types of actions.

The precise size of whistleblower awards is at the discretion of the SEC.  Factors the SEC will consider include:  (i) the degree of assistance provided; (ii) the significance of the information; (iii) the interest of the SEC in deterring the conduct at issue; and (iv) additional factors to be determined.  There are also numerous provisions designed to keep whistleblowers? identities secret to the extent ? and for as long as ? possible.

Full post as published by PomTalk on July 29, 2010 (boomark / email).