November 17, 2010
RE: Comments to Rule 21F-2
The requested comment is as follows:
1. In other provisions of these Proposed Rules-e.g., Proposed Rule 21F-15-we propose that whistleblowers not be paid awards based on monetary sanctions arising from their own misconduct, based on the notion that the statue is not intended to reward persons for blowing the whistle on their own misconduct. Consistent with this approach, should we define the term "whistleblower" to expressly state that it is an individual who provides information about potential violations of the securities laws "by another person"?
As a student of law, I find it prudent to suggest allowing those who have committed criminal acts themselves may prove beneficial to making any whistleblower statute more effective. In many cases, securities fraud cases involve more than one individual. The only incentive for one to come forward to expose the "conspiracy" is immunity from prosecution. Coupled with an effective "reward" for whistle blowing, one can imagine many more might come forward to expose fraud. It is clear there is a policy question here, hence the request for comment. I suggest, if rewards are left within the agency's discretion for "criminal participants" in conjunction with immunity offered by the Justice Department, there is a higher potential of successful for the statute to combat securities fraud.
W. Charles Sipio