SEC Rule Will Let Whistle-Blowers Bypass Internal Programs - Bloomberg

The U.S. Securities and Exchange Commission will let corporate whistle-blowers collect as much as 30 percent of penalties when they report financial wrongdoing, even when they bypass companies’ internal complaint systems.

SEC commissioners voted 3-2 today in Washington to establish a whistle-blower program to “reward individuals who provide the agency with high-quality tips that lead to successful enforcement actions.” The program, part of the SEC’s rulemaking under the Dodd-Frank Act, expands a bounty system that was previously limited to insider-trading cases.

In setting the rules, the SEC rejected appeals to require that whistle-blowers make reports through companies’ internal compliance programs before going to the agency. Instead, the regulator increased incentives for internal complaints by permitting bounties for people whose tips are passed along on to the agency and expanding the time whistle-blowers can maintain their place in line at the SEC while reporting to the company.

“Incentivizing -- rather than requiring -- internal reporting is more likely to encourage a strong internal compliance culture,” SEC Chairman Mary Schapiro said in prepared remarks before the vote.

via bloomberg.com

Posted via email from Jack's posterous