U.S. Senator Sends Letter To SEC In Strong Support Of SEC’s Whistleblower Program

On September 19, 2018, United States Senator Charles Grassley (R-IA) wrote a letter strongly supporting the SEC’s whistleblower program to the Chairman of the United States Securities and Exchange Commission.

At the time, Senator Grassley was the Chairman of the United States Senate Committee on the Judiciary.  The letter was written on the letterhead of the U.S. Senate Committee on the Judiciary.

The U.S. Congress Wants Large SEC Whistleblower Awards

SEC’s whistleblower programUnder the SEC whistleblower program, if all of the criteria are satisfied, the SEC must give out a monetary award of 10% – 30% of the amount that it collects from the securities law violators.  This has led to some very large SEC whistleblower awards of millions of dollars to the whistleblowers.  The SEC’s whistleblower program has even given out individual awards of tens of millions of dollars.

 

In Senator Grassley’s letter, he defended the granting of large SEC whistleblower rewards to meritorious whistleblowers.

When the U.S. Congress created the SEC’s whistleblower program, it was not concerned about granting large — or even very large — whistleblower awards.  As Senator Grassley explained, “If anything, the legislative history shows that Congress was more concerned about potential whistleblower awards being too stingy”.

According to Senator Grassley, “Congress placed great weight on the value of a predictably comfortable award margin.”  (Letter, p. 3.)

Granting significant SEC whistleblower awards was a priority for Congress when it created the SEC’s whistleblower program.  In his letter, Senator Grassley emphasized that “Congress made a very clear policy choice to prioritize amply rewarding a whistleblower above other priorities”.  (Letter, p. 4) (italics in original letter.)

SEC Whistleblower Award Factors

In the Dodd-Frank Act itself, Congress set forth specific factors for the SEC to consider when determining the amount of a whistleblower award.  Senator Grassley clarified:

SECs whistleblower program

those factors Congress explicitly noted were crucial for the success of the whistleblower program are directed
to the value the whistleblower provides to the SEC in the particular case — the quality of assistance, significance of information, and the message the award sends to others potentially contemplating similar securities laws infractions.  (Letter, p. 3.)

Senator Grassley pointed out that “None of those factors contemplate the potential dollar number itself as a factor in determining the final warranted award”.  (Letter, p. 3.)

SEC Whistleblower Confidentiality

With regard to SEC whistleblower protections, Senator Grassley clarified:

In designing the Commission’s whistleblower award program, Congress intended for the Commission to safeguard all information “which could reasonably be expected to reveal the identity of a whistleblower[.]”  (Letter, p. 5.)

Senator Grassley called the protection of a whistleblower’s identity “a linchpin” of the SEC’s whistleblower program.  (Letter, p. 5.)

Additional Information

To find out more about Senator Grassley’s letter supporting the SEC’s whistleblower program, click on the links below: