U.S. Chamber Urges SEC to Reconsider Whistleblower Bounty Program

On November 3, 2010, the U.S. Chamber of Commerce expressed serious concerns over the SEC’s proposed whistleblower rules, warning that the new program threatens to undermine existing corporate compliance programs that the federal government has long advocated as an important component of responsible and effective corporate governance.

SEC Proposed Rule Would Create Incentive for Amateur Employee Sleuthing

“Instead of allowing companies to identify and fix problems, we are just creating a lottery,” said David Hirschmann, president and CEO of the U.S. Chamber’s Center for Capital Markets Competitiveness. “This bounty program creates incentive for employees to become amateur sleuths in search of a big payday. We want a system that works, not a system of gotcha.”

(As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC entitles whistleblowers to an award valued between 10% and 30% of the sanctions imposed in federal securities law enforcement actions that result in at least $1 million in sanctions. Under Sarbanes Oxley, whistleblowers were not provided with a financial award. See ITT's Online Archives or 11/04/10 news, 10110411, for BP summary of the SEC's approval of its proposed rule.)