SEC’s New Whistleblower Program Takes Effect

August 12, 2011

The SEC launched a new webpage for people to report a violation of the federal securities laws and apply for a financial award.  The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provided the SEC with the authority to pay financial rewards to whistleblowers who provide new and timely information about any securities law violation.  Among other things, to be eligible, the whistleblower’s information must lead to a successful SEC enforcement action with more than $1 million in monetary sanctions. 

The SEC’s new webpage at www.sec.gov/whistleblower includes information on eligibility requirements, directions on how to submit a tip or complaint, instructions on how to apply for an award, and answers to frequently asked questions.

According to the SEC, the new whistleblower program is designed to protect investors in several ways:

  • Better Tips: Over the past several months, the SEC has seen an increase in the quality of tips that it has been receiving from individuals since Congress created the program. 
  • Timely Tips: Potential whistleblowers are incentivized to come forward sooner rather than later with “timely” information not yet known to the SEC. 
  • Maximizes Outside Resources: With fewer than 4,000 employees to regulate more than 35,000 entities, the SEC cannot be everywhere at all times. With a robust whistleblower program, the SEC is more likely to find and deter wrongdoing at firms it may not have otherwise uncovered& 
  • New Protections Against Retaliation: Employees who come forward are provided with new tools to protect themselves against employers who retaliate. 
  • Bolsters Internal Compliance: The new rules provide significant incentives for employees to report any wrongdoing to their company’s internal compliance department before coming to the SEC.  Therefore, companies that would prefer their employees report internally first are incentivized to a have credible, effective compliance program in place.

The SEC adopted final rules on May 25, 2011 to implement the Dodd-Frank Act whistleblower program.  Individuals seeking to be considered for an award under the Whistleblower Program are required to submit an online questionnaire or the newly approved Form-TCR.  Prior to the enactment of the Dodd-Frank Act, the SEC only had authority to reward whistleblowers in insider trading cases.

Please click here to access this press release.


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Exchange-Traded Funds (ETFs), Investment Advisers, Investment Companies, Regulatory