Jul. 25, 2018
Thank you for the opportunity to comment on SEC File No. S7-16-18.
According to SEC data, there have only been 3 large whistleblower awards. The SEC receives over 3,000 whistleblower tips a year. The odds are already stacked against a large SEC whistleblower, who then has the majority of her award eaten up by taxes and legal fees. As further evidence of whistleblower difficulties, the most recent large SEC award, received by a Florida resident, took 8 years, from first observing the securities violation, to receiving the SEC monetary award. The SEC is well aware of these dynamics which already disadvantage large whistleblowers. This SEC proposal to further handicap large whistleblowers is irregular.
I believe the SEC must be seeing something that has caused them to make this irregular proposal. For example, Facebook securities violations, and Facebook investigations (by multiple federal agencies) have currently been in the news. At the same time, a Facebook SEC Whistleblower tip has been in the news (I have not submitted this tip). Whichever situation is causing the SEC to propose this change, I believe the SEC must be candid about what they are seeing that has caused them to make this irregular proposal.
The proposed rule would also reduce or eliminate whistleblower awards if the SEC later determines the violations would have been reasonably apparent to the SEC. I regret saying so, but the agency that was advised 5 times of the Bernie Madoff fraud, and still failed to investigate, should not later be able to declare "they would have" discovered a fraud by utilizing the massive in-house talent available at the SEC.
I believe the whistleblower community should come together, because the real reason for this proposal will be brought to light in the coming months. The SEC should say what they are seeing now, otherwise the underlying securities matter that has actually caused this irregular proposal, will also come into question. If, for instance, the recent Facebook matter is the real impetus for this SEC proposal, will the underlying Facebook matter be properly investigated by the SEC, or will that also be covertly diminished to hobble the whistleblower?
I ask the SEC to be forthright concerning their reasons for this proposal.
Thank you