SEC Commissioners voted along party lines, as a divided SEC approved a new program for compensating whistleblowers whose tips lead to sanctions in excess of $1 million.  Eligible rewards would range from 10% to 30% of the total amount.  While the rule encourages whistleblowers to first report problems internally, the SEC did not make that a requirement. 

It's that last element - who reports to whom - that has made this issue one of the most contentious provisions mandated under the Dodd-Frank Reform Act.  Publicly-traded companies from Google Inc to JPMorgan Chase have expressed fears the whistleblower rule could undermine internal compliance programs at public companies.  The U.S. Chamber of Commerce, one of the rule's biggest critics, said the SEC had put "trial lawyer profits ahead of effective compliance."

In voting against the rule, the 2 Republican SEC Commissioners raised numerous concerns - e.g., its impact on internal compliance, the possibility it may inundate the SEC with complaints that do not prove to be fruitful.

Supporters of the rule, such as the National Whistleblowers Center, lauded the agency for resisting opposition from Wall Street lobbyists.  And SEC Chairman Mary Schapiro said the final rule struck the correct balance between encouraging whistleblowers to report problems internally, when appropriate, while providing the option of heading directly to the SEC.

To promote internal reporting, the SEC added some features to the rule, such as making a whistleblower eligible for a reward if he or she reports wrongdoing to the company and the company, in turn, reports it to the SEC.   [Reuters, 5/25/11]