US whistleblower provisions could undermine compliance

Author: | Published: 12 Nov 2010

Whistleblower incentive provisions in the Dodd-Frank Act must be implemented sensitively. Securities Exchange Commission (SEC) rulemakers should encourage informants to step forward without undermining internal programs that would normally field reports of misconduct.

Section 922 of the Act requires the SEC to award whistleblowers 10-30% of any judgement resulting directly from information they provide. It also gives them the right to sue their employers for any retaliatory damages that arise after the fact.

With judgements that can easily reach hundreds of millions of dollars, SEC officials say they are already being flooded with tip-offs. But not all attorneys agree the ends justify the means.

“It takes the worst part...