November 5, 2020

SEC Enhances Whistleblower Program

The SEC amended its whistleblower program with the goals of (i) providing greater transparency to whistleblowers, (ii) properly incentivizing whistleblowers and (iii) awarding whistleblowers to the "maximum extent appropriate."

The SEC whistleblower program pays eligible whistleblowers an amount equal to not less than 10 percent, and not more than 30 percent, of collected monetary sanctions where the whistleblower provides original information to the SEC that leads to a successful enforcement where the amount recovered exceeds $1 million. As previously covered, the SEC also published interpretive guidance concerning the terms "independent analysis" and "unreasonable delay."

As described in the final rule (and as previously covered), the amendments would:

  • establish a uniform definition of "whistleblower" in response to the Supreme Court's decision in Digital Realty Trust, Inc. v. Somers;
  • attempt to clarify the Commission's broad discretion when applying award factors and setting award amounts;
  • remove the potential for double recovery under the definition of "related action";
  • prevent repeat whistleblower submitters from "abus[ing] the award application process";
  • institute summary disposition procedures for certain types of likely denials;
  • increase flexibility for whistleblower submissions and institute new mechanisms for those who failed to timely comply with requirements; and
  • clarify the materials that may be part of the administrative record for purposes of judicial review.

The final rule will go into effect on December 7, 2020.