SEC Whistleblower Program Endangered By Proposed Changes Warns Advocacy Group

The Securities and Exchange Commission’s whistleblower program is endangered by proposed changes, Better Markets, a Dodd-Frank Act advocacy group warned today.

The “dangerous and legally baseless” changes risk discouraging whistleblowers from going to the SEC to expose illegalities, asserted the group.

Better Markets contended as well the modifications would expose investors to needless harm and increases the chances some wrong doers could remain on the loose from fraud that would go unreported and undetected.

“(The SEC) should act with maximum caution and humility in attempting to tamper with a wildly successful program that has helped millions of investors and punished lots of fraudsters,” Better Markets said in a whitepaper.

The group cited two proposed changes as counterproductive and self-defeating:

1. A cap of 10 percent of the collected sanctions for whistleblowers who are the first to come to the Commission with evidence of large wrongdoing. Currently, whistleblowers can receive up to 30 percent of money collected when miscreants are assessed with penalties exceeding $1 miliion.

2. Whistleblowers would be ineligible for awards because of original information the Commission that may contain a news article or other public information.

“The Proposal(s) would make the Whistleblower Program user-unfriendly and contrary to Congress’s intent,” Better Markets claimed.

The whitepaper came out the same day the SEC announced the awarding of the largest single payment to a single whistleblower: $50 million.

To see the full nine-page Better Markets whitepaper, click on: