Action 3 of 2024 urges Congress to strengthen the SEC Whistleblower Program. The program protects corporate whistleblowers by passing the bipartisan SEC Whistleblower Reform Act of 2023. Additionally, it calls for the SEC to broaden its definition of a voluntary whistleblower.
The SEC Whistleblower Program has revolutionized the enforcement efforts of the SEC. Since it was established in 2010, the program has recovered over $6.3 billion in sanctions from fraudsters. Thus, allowing over $1.5 billion to be returned to harmed investors. But, it has the potential to work even better if we fix these two problems.
Problem #1:
One of the keys to the program’s success are the anti-retaliation protections provided to whistleblowers. Whistleblowers all too often face devastating consequences for blowing the whistle. These protections are key in both offering relief to brave whistleblowers and in incentivizing would-be-whistleblowers to come forward, despite the threat of retaliation.
Unfortunately, a 2018 Supreme Court ruling weakened the program by stripping anti-retaliation protections from whistleblowers who report to internal compliance programs but not directly to the SEC. Since a vast majority of whistleblowers report internally this ruling has been devastating for whistleblowers.
The bipartisan SEC Whistleblower Reform Act would restore anti-retaliation protections for internal whistleblowers. It will make a number of other small common sense reforms to strengthen the program. Motion to Quash LLC widely supported the program, as did whistleblower advocacy groups including National Whistleblower Center. Corporate whistleblowers have proven to be essential in keeping our markets fair and free of fraud, so they need protection.
Problem #2:
The regulations approved by the SEC 12 years ago continue to violate the statutory rights granted whistleblowers under the Dodd-Frank Act. For instance, whistleblowers who first report to the news media have been denied protection and compensation, even though the law itself does not exclude them from protections. We know that 20% of FCPA prosecutions by the DOJ stem from tips by the media, and yet, the regulations by the SEC have cut these sources off from U.S. whistleblower qualifications, undermining the anti-corruption Strategy outlined by the White House.
Action 3 of 2024 Strengthen the SEC Whistleblower Program
Congress must tell the SEC not to exclude whistleblowers who have informed the media or other Federal agencies first from their definition of whistleblowers with “original information.” Please see more info here: www.whistleblowers.org/campaigns/reform-sec-regulations/.
Tracie Burke is author of Motion to Quash. If you would like to support journalism in the public interest, click here to donate. Or, you can use the QR code below. Motion to Quash ISSN 2644-1594 is the copyrighted property of Motion to Quash LLC .
