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
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...