SEC Issues Proposed Dodd-Frank Whistleblower Rules

On November 3, 2010, the U.S. Securities and Exchange Commission ("SEC") issued proposed rules for implementing the whistleblower program established by Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"). Under the program, eligible whistleblowers who voluntarily provide the SEC with original information regarding a violation of the securities laws or the Foreign Corrupt Practices Act ("FCPA") may receive a bounty of a minimum of 10% and a maximum of 30% of the penalties received, if the penalties exceed $1,000,000. Because whistleblowers now have considerable financial motivation to report potential violations to the SEC, companies face a significantly increased risk of investigations into their business and accounting practices. The SEC has reported that it already is receiving numerous reports under the whistleblower program. In light of this, companies should review their corporate compliance programs and internal