Tag Archives: Sean X. McKessy

SEC’s Misguided “Solution” In Search Of A Problem: Proposed Rule Would Hurt Whistleblower Program

by Sean X. McKessy

The US Securities and Exchange Commission has long hailed its whistleblower program as a success, with the former SEC chair, Mary Jo White, calling it a “game changer” in enforcement and current Chairman Jay Clayton saying “the strength of our whistleblower program is a critical component in our investor protection toolbox.”

So it makes no sense for the SEC to adopt certain proposed rules (PDF: 837 KB) that would inject into the program uncertainty for whistleblowers and discourage those with detailed knowledge of massive fraud from stepping forward. Yet that’s what the SEC is considering doing by arbitrarily cutting awards for the most valuable whistleblowers to less than what they should be entitled to under the statute and current rules.

Rewards are a major reason for the SEC whistleblower program’s success. They have ranged from $50,000 to $50 million. Continue reading