The new rules described below pose new and significant challenges to public companies and other SEC-regulated entities by providing whistleblowers (i) the potential for large financial rewards, and (ii) anti-retaliation protection.

On May 25, 2011 the SEC approved, by a 3-2 vote, new rules to implement Section 21F “Securities Whistleblower Incentives and Protection” of the Securities Exchange Act of 1934 (the “Exchange Act”). These rules were adopted to put into effect the whistleblower bounty provisions of The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which became law in July 2010. Section 21F of the Exchange Act requires the SEC to pay monetary awards, subject to conditions and limits, to “whistleblowers” who provide the SEC with original information about a violation of the securities laws that leads to the successful enforcement of a judicial or administrative action resulting in monetary sanctions exceeding $1 million. The final rules will be effective on August 12, 2011.  Read more…