USA: SEC amends rules to incentivise whistleblowers
The Securities and Exchange Commission ('SEC') adopted, on 26 August 2022, two amendments to the rules governing its whistleblower program. Specifically, the SEC outlined that their whistleblower program was established in 2010 in order to encourage individuals to report high-quality tips to them and help them detect wrongdoing and better protect investors and the market, with over $1.3 billion being awarded under the program to date.
In particular, the SEC highlighted that the first amendment allows the SEC to pay awards to whistleblowers for actions brought by other entities, including designated federal agencies, in cases where those awards might otherwise be paid under that entity's whistleblower program. Furthermore, the SEC added that such awards on their part will be allowed when the other entity's program is not comparable to their own or if the maximum award that the SEC could pay on the related action would not exceed $5 million.
Moreover, the SEC stated that the second amendment would allow them to only consider changing the amount a whistleblower can be awarded for the limited purpose of increasing this, eliminating the SEC's authority to decrease the amount of these awards.
Lastly, the SEC noted that such amendments will become effective 30 days after their publication in the Federal Register.