Whistleblowers could reap financial benefits with a new rule approved by the Securities and Exchange Commission (SEC) on Wednesday. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC rule rewards personnel who expose securities violations, such as Medicare fraud. As an incentive, whistleblowers of publicly traded companies who provide original information that is validated and lead to SEC sanctions of more than $1 million will receive 10 to 30 percent of the settlement money.
In addition to financial incentives, the new SEC rule offers whistleblowers protections from employer retaliation and certain restrictive confidentially agreements.
"For an agency with limited resources like the SEC, it is critical to be able to leverage the resources of people who may have first-hand information about violations of the securities laws," SEC Chairman Mary L. Schapiro said in a press release. "While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law. We expect this trend to continue, and these final rules map out simplified and transparent procedures for whistleblowers to provide us critical information."
The rule does not apply to lawyers, foreign government officials, compliance and internal audit personnel, or public accountants.