August 13, 2011 –
SEC’s New Whistleblower Program Officially Launches

The SEC’s new whistleblower rules and the new Office of the Whistleblower officially launched today. The new rules, mandated by the Dodd-Frank Act, provide that eligible whistleblowers may receive an award for providing information concerning certain fraudulent activity to the SEC. An “eligible whistleblower” is a person who voluntarily provides the SEC with original information about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur. In order for an eligible whistleblower to receive an award, the information provided must lead to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million. One or more persons are allowed to act as a whistleblower, but companies or organizations cannot qualify as whistleblowers. Eligible whistleblowers will receive between 10-30% of the monetary sanctions. The exact percentage will be determined by the SEC based on a number of factors.

Companies should carefully review their internal compliance programs and policies in the wake of the new whistleblower rules becoming effective. This should include raising awareness of the incentives for potential whistleblowers for first reporting information internally in accordance with such programs and policies.

More information about the new whistleblower program may be found by visiting the Office of the Whistleblower website here.