• SEC Proposes Whistleblower Program
  • November 22, 2010 | Authors: Robert A. Boresta; Jeffrey H. Elkin; Robert W. Ericson; Edward J. Johnsen; James J. Junewicz
  • Law Firms: Winston & Strawn LLP - Chicago Office ; Winston & Strawn LLP - New York Office ; Winston & Strawn LLP - Chicago Office
  • On November 3rd, the Securities and Exchange Commission (the “SEC”) published proposed Regulation 21F (the “proposed rules”), establishing a program designed to reward individuals who provide the SEC with information leading to successful enforcement actions.1 The proposal was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”)2 and sets out procedures under which potential informants (“whistleblowers”) could qualify for significant monetary awards by providing information to the SEC regarding violations of the federal securities laws. The proposed rules are intended to encourage and reward whistleblowers who act early to expose violations and provide important evidence that helps the SEC to bring successful cases. However, they raise some significant challenges that are likely to increase the cost of doing business for many companies, including the need to consider establishing internal processes for investigating and responding to potential securities law violations (or reviewing and improving existing ones) and the risk of retaliatory claims.