The SEC today adopted rules to create a whistleblower program that rewards individuals who provide the agency with high-quality tips that lead to successful enforcement actions.  The new SEC whistleblower program is mandated by the Dodd-Frank Reform Act, and is primarily intended to reward individuals who act early to expose violations and who provide significant evidence that helps the SEC bring successful cases.

Whistleblower Requirements.   To be considered for an award, the SEC’s rules require that a whistleblower must voluntarily provide the SEC with original information that leads to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions totaling more than $1 million.  The rules will be effective 60 days after they're submitted to Congress or published in the Federal Register.

"For an agency with limited resources like the SEC, it is critical to be able to leverage the resources of people who may have first-hand information about violations of the securities laws.  While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law. We expect this trend to continue, and these final rules map out simplified and transparent procedures for whistleblowers to provide us critical information."  - -  SEC Chairman Mary Schapiro. 

Final Rule Summary.   The Commission is adopting rules and forms to implement Section 21F of the Securities Exchange Act of 1934 entitled, "Securities Whistleblower Incentives and Protection."  Subject to certain limitations, eligible whistleblowers who voluntarily provide the Commission 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 will be rewarded.  Dodd-Frank also prohibits retaliation by employers against individuals who provide the Commission with information about possible securities violations.

For further details, go to:

• [SEC PR 11-116, 5/25, 'Announcement']
• [SEC Final Rule Release 34-64545, 5/25/11, "Implementation of the Whistleblower Provisions .."]