sec whistleblower rulesEach year, the Securities and Exchange Commission receives thousands of SEC whistleblower tips.  Each year the SEC denies far more applications for awards than it gives out.  If you read the SEC’s orders denying awards, it becomes apparent that many awards are denied because the person did not comply with all of the SEC whistleblower rules.

The SEC Whistleblower Rules Are 28 Pages Long

The specific section of the Dodd-Frank Act that created the SEC whistleblower program is approximately 7 pages long.  The SEC was charged with creating rules to implement the program, which it did.

As originally implemented in August 2011, the SEC whistleblower rules were divided into 17 sections, most if not all with subsections.  Those SEC whistleblower rules, along with written commentary by the SEC, spanned approximately 37 pages, followed by approximately 25 more pages of exhibits and instructions.

With all of the commentary and exhibits removed, there are approximately 28 pages of just SEC whistleblower rules.

It May Be Difficult To Understand The SEC Whistleblower Rules

The failure to comply with all of the SEC whistleblower rules is not always due to someone’s lack of attention or sloppiness.  By definition, SEC whistleblowers tend to be people who work at public companies, financial institutions, investment banks, and other companies.  During the day, these people have full-time jobs to attend.  At night and on weekends, they have family and other obligations to fulfill.

When these people come across evidence of corporate or securities fraud, they typically do not have the legal education and training, or the time, to learn and understand the myriad SEC whistleblower rules that apply.

Compounding this dilemma is the fact that the SEC whistleblower rules are relatively new in legal terms.  In many other legal areas, the laws and rules have been gradually developed over decades.  Consider that the original securities laws were passed in 1933, and the law that created the SEC was enacted in 1934.  But the law that created the SEC whistleblower program was not passed until 2010, and the SEC whistleblower rules did not come into effect until August 2011.

This means that where the SEC whistleblower rules are unclear, or have not yet been applied to a particular factual situation before, there is little to no guidance out there to help someone understand how those rules might be interpreted and applied to their particular case.  For some rules, it may take years for the SEC to have a case in which it can clarify its interpretation.  In others, it might be even longer before enough cases have been decided for reliable patterns to emerge.

Some Of The Basic SEC Whistleblower Rules

It may take an expert in securities law, with many years of experience representing people in both traditional SEC cases, as well as in SEC whistleblower cases, to know and understand all of the SEC whistleblower rules and how those rules might be applied in any particular case.

Nevertheless, it is probably a good idea for potential SEC whistleblowers to get at least a general understanding of some of the main SEC whistleblower rules.  Not only might this give them a measure of comfort in proceeding as SEC whistleblowers, but it might also help them to get a gut sense of whether the advice they are getting seems well thought out.

To get started with some basic information about the SEC whistleblower rules, click on any of the links below: