Speech by SEC Commissioner:
Implementation of 21F of the Exchange Act, "Whistleblowers Incentives and Protection" (proposed rules and forms)
Commissioner Elisse B. Walter
U.S. Securities and Exchange Commission
SEC Open Meeting
November 3, 2010
I, too, would like to thank the staff, and especially the Division of Enforcement and Office of General Counsel, and the numerous other staff who have worked on this rulemaking, for their hard work on the proposed rules and forms before us today. I support their thoughtful recommendations. And, I look forward to the input we will get from all commenters; there are important policy considerations that are being balanced in this rulemaking, and we need to hear your views.
As you've heard, the whistleblower program established under the Dodd-Frank Act requires the Commission to pay an award to eligible whistleblowers who voluntarily provide us with original information about a violation of the federal securities laws that leads to a successful enforcement of a covered judicial or administrative action, or a related action. Today the staff is making recommendations to implement the program. In their statements this morning, they have laid out the main provisions of the rules under Section 21F that we are considering, so I will not repeat them.
However, I would like to focus, as the staff and Commissioner Casey did earlier, on the importance of ensuring that the robust whistleblower program we are committed to establishing does not undercut existing and effective company compliance and other internal processes for responding to violations of the federal securities laws. I believe that these processes are important, and to protect investors it is critical that they also remain robust. I encourage public comment on this point.
Another area where an important balance must be struck relates to whistleblowers who have also participated in the wrongdoing in question. The Dodd-Frank Act provides that whistleblowers who are criminally convicted are ineligible, but I strongly believe that we should take steps to minimize other culpable whistleblowers from benefitting from their own misconduct.
Thus, I am supportive of the proposed rule that excludes monetary sanctions ordered against and collected from whistleblowers themselves, and amounts ordered against any entity liable substantially as a result of conduct that a culpable whistleblower directed, planned, or initiated. Please give us your thoughts on these aspects of the proposal.
Once again, I appreciate the efforts of the staff, and have a few questions.