The SEC whistleblower rules, adopted by the SEC under Section 21F of the Securities Exchange Act pursuant to a mandate in the Dodd-Frank Wall Street Reform and Consumer Protection Act, provide for the payment of bounties or awards to whistleblowers. Under the SEC whistleblower rules, a bounty or award will be payable to eligible whistleblowers who provide “original information” concerning a violation of federal securities laws that leads to a successful enforcement action in a covered judicial or administrative action, or a “related action,” by the SEC or other specified agencies, resulting in monetary sanctions (fines or penalties, disgorgement, and/or interest on the disgorged amounts) of at least $1 million. Bounty awards are mandatory if the foregoing criteria are met. Eligible whistleblowers can receive between 10 – 30% of the monetary sanctions actually recovered.

For the most part, the SEC whistleblower rules deal with definitions and the operation of the rules, such as who is eligible be a whistleblower, what information qualifies as “original information,” what is meant by “leads to a successful enforcement action,” and procedures for applying for, and the awarding of, whistleblower bounties, as well as how to appeal such awards. These are matters that companies that may be the subject of whistleblower complaints largely have no control over and no role in.

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