The Securities and Exchange Commission's new rules for corporate whistleblowers include the following key provisions:
Qualifying for a reward
- Original information about suspected violation of securities law must be based on whistleblower's independent knowledge or independent analysis, and not already known to SEC.
- Information must lead to successful SEC enforcement action by prompting agency to open new investigation, reopen an old one, or open new line of inquiry in an existing one.
- Whistleblower must report information through employer's internal procedures before or at the same time it is given to the SEC. Participation in employer's compliance system can boost amount of eventual award.
- SEC must obtain sanctions of at least $1 million in case.
Who is ineligible
- Those with a legal or contractual duty to report information to the SEC; attorneys who try to use information from clients to make whistleblower claims for themselves; foreign government officials.
- *Corporate compliance and audit staff, and public accountants are usually not eligible for awards. Exceptions include when whistleblower believes disclosure may prevent harm to investors; company is interfering with investigation; or at least 120 days have elapsed since whistleblower reported information to corporate officials.
- Whistleblower is protected from employment retaliation if she or he has a reasonable belief that a securities law violation has occurred, is ongoing, or is about to occur.
Office of the Whistleblower
- SEC recently created an Office of the Whistleblower to work with tipsters and help agency determine amounts of awards.