Rewards of up to $1m for US whistleblowers
CORPORATE whistleblowers could score multi-million-dollar payouts for reporting financial wrongdoing under a new programme approved by US securities regulators yesterday.
A divided US Securities and Exchange Commission (SEC) voted 3-2 to finalise the measure that has grown into one of the most contentious requirements of last year’s Dodd-Frank Wall Street overhaul law.
Tipsters would be paid between 10 and 30 per cent of sanctions over $1m (£600m) for original and useful information. Companies have expressed fears the whistleblower rule will undermine internal compliance programmes at public companies by encouraging employees to go directly to the SEC. The rule does not require whistleblowers to first, or simultaneously, report problems internally, as companies had sought.
In a concession to companies, the final SEC version would make a whistleblower still eligible for a reward if he or she reports wrongdoing to the company, and the company, in turn, reports it to the SEC.
Businesses such as the US Chamber of Commerce are unhappy about the rule and could appeal. The SEC had put “trial lawyer profits ahead of effective compliance,” it said.