October 17, 2019
I write as the author of comment Anonymous-9 to reiterate my opposition to proposed rule 21F-9(e). To the best of my knowledge, my September 18, 2018 comment was the first to identify the potential impact of the proposed rule, and the increasingly alarming series of recent additional comments on the topic has concerned me enough to take a moment to emphasize that opposition to 21F-9(e) is a perspective widely shared among whistleblowers.
As described on pp.5-6 of my September 18, 2018 comment, proposed rule 21F-9(e) should not be adopted because it is at odds with the established communication practice of enforcement staff and whistleblowers. It is not uncommon for whistleblowers to communicate with enforcement attorneys prior to the filing of a form TCR, and in some circumstances doing so enables the SEC to act more quickly to stop ongoing fraud, secure assets, and prevent further harm to investors.
Enforcement staff routinely encourage whistleblowers to file a follow-up TCR, while welcoming the earliest possible initial contact, which is often the impetus for staff to open an initial MUI or investigation. There are examples of prompt outreach from a whistleblower leading directly to an asset freeze, TRO, or trading suspension within a short period of time. Disqualifying these indisputably helpful submissions on the basis of paperwork defects does not serve any programmatic purpose and would have a significant chilling effect on communication from outside analysts. A purely discretionary, time-limited exception to this policy is an insufficient protection for whistleblowers whose information unambiguously leads to the success of an enforcement action, despite a delay in perfecting the submission by following the procedures of Rules 21F-9(a) and (b).
The 21F-9(a) and (b) procedures of course still need to be followed before a whistleblower is ultimately eligible to collect, but the goal of rule enhancements should be to see meritorious whistleblowers rewarded, not create traps for the unwary.
I remain available through counsel to discuss my perspective and personal experience on this matter if you are still considering adopting the rule in its proposed form.