Living With The SEC’s Whistleblower Rules

On May 25, 2011—with two Commissioners dissenting—the Securities and Exchange Commission ("SEC" or "Commission") released final rules implementing the new whistleblower program created by The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), which was enacted on July 21, 2010.¹ While the Dodd-Frank Act sets forth a basic framework for the whistleblower program, Congress left many of the thorny details to the SEC to resolve through rulemaking.² To that end, the SEC released proposed rules for comment on November 3, 2010.³ Over the next month-and-a-half, more than 1,000 organizations and individuals—including blue chip companies, trade associations, whistleblower advocates, academics, and others—commented on the Proposed Rules.⁴ Many of the comment letters voiced concerns that the whistleblower program would undermine existing corporate compliance programs by permitting whistleblowers to bypass internal reporting mechanisms and providing