For Immediate Release
SEC Admits Rules Would 'Discourage' Whistleblowers and Limit Access to 'Important Information'
NWC Objects to Proposed Rules After SEC Admits the Rules Will Result in "Forgone Opportunities for Effective Enforcement"
WASHINGTON - Today, the National Whistleblowers Center (NWC) voiced its strong opposition
to Proposed Rules submitted by the Securities and Exchange Commission
implementing the whistleblower provisions of the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
In a letter to the SEC Chairman
released today, the NWC disclosed that buried in its 181-page rule
making document, the Commission staff was forced to admit that its
rules, if approved, would actually undermine protections for
whistleblowers and cause employees to withhold important information
about securities violations from the SEC.
The following admissions are
contained in the SEC staff's analysis of the Proposed Rules:
* "would limit the pool of eligible whistleblowers and thereby reduce the number of potentially useful informants" Proposed Rule, p. 112;
* "discourage potential whistleblowers from coming forward" by "heightening the standards for eligibility" Proposed Rule, p. 117;
* "discourage some whistleblowers from submitting potentially useful information" Proposed Rule, p. 118;
* "result in instances in which the Commission does not receive important information regarding potential violations" Proposed Rule 118;
* "cause those persons not to come forward with information in their possession about securities law violations." Proposed Rule, p.
* "result in . . . forgone opportunities
for effective enforcement action." Proposed Rule, p. 118.
impediments, the Commission also acknowledged that its proposed
procedures for filing a claim will be "burdensome and confusing" for many whistleblowers. Proposed Rule, p. 116.
Commission is cooking the goose that can lay the golden egg. Under
their proposal, fraud will go undetected for years and investors will
lose untold billions of dollars," said Stephen M. Kohn, Executive
Director of the National Whistleblowers Center. "The same Commission
that repeatedly failed to investigate whistleblower concerns over Bernie
Madoff's Ponzi scheme is now poised to implement rules that will ensure
that future Madoff's will go undetected," added Kohn.
The NWC also filed today a detailed Freedom of Information Act
request seeking full public disclosure of all corporate lobbying related
to the whistleblower provision: "We need
to get to the bottom of why the
SEC has gutted critical oversight and accountability provisions of
Dodd-Frank. The public deserves to know how lobbyists corrupted the
process designed to prevent the next financial meltdown," added Lindsey
M. Williams, the Director of Advocacy and Development of the NWC.
Since 1988, the NWC and attorneys associated with it have supported whistleblowers in the courts and before Congress and achieved victories for environmental protection, government contract fraud, nuclear safety and government and corporate accountability.