Partner Bryan House was quoted in the Law360
article, “SEC Rule A Bittersweet Victor For Whistleblower Advocates
,” about the U.S. Securities and Exchange Commission’s decision to nix a controversial plan to limit the largest whistleblower awards. The final rule published Wednesday scrapped a 2018 proposal that would have given the SEC the discretion to reduce the award amounts to whistleblowers for cases that yield more than $100 million in total sanctions and at least a $30 million bounty. The SEC backpedaled on the proposal, stating that a "formalized mechanism" for this isn't necessary and that the commission already had the authority to make adjustments through its existing "award factors" criteria.
In addition, to qualify for awards whistleblowers must now provide insight beyond what would be "reasonably apparent" to the commission from publicly available information, according to new guidance in the final rule, which some attorneys faulted for its ambiguity. Some have suggested hat both developments raise more questions than they answer and could ultimately have negative consequences on a program that most agree has been a resounding success.
"The SEC's whistleblower program is obviously here to stay," House said. "When you step back, a lot has happened in 10 years. The idea that your employees could go to the SEC and [earn] million-dollar bounties for reporting wrongdoing was tough to swallow for some."
"But now — nine years after the SEC's initial rules took effect — companies, employees, and the SEC have more or less figured out how to make it work," he said.