The future success of the Securities and Exchange Commission whistleblower program has come down to this: What does the word “cap” mean?
SEC Chairman Jay Clayton, under fire from Congress and whistleblower advocates, insists that he opposes “caps” on SEC whistleblower awards and that a proposed rule that would limit SEC whistleblower awards in cases where more than $100 million is collected in monetary sanctions is not a cap.
The proposed SEC rule inserts unnecessary uncertainty into the whistleblower program that will only discourage whistleblowers from taking the risk to report wrongdoing. With the proposed rule hanging over the program, the number of annual whistleblower submissions to the SEC dropped slightly for the first time this past year.
When considering the proposed rule, the SEC also should keep in mind that large awards attract other whistleblowers to report securities law violations to the SEC. That opportunity would be curtailed with smaller awards.
The SEC whistleblower program is too important to come down to semantics. Before he schedules a vote on changes to the SEC whistleblower program, Clayton should stop arguing about whether the proposed limit is a “cap,” and instead clearly state whether he supports limiting whistleblower awards as the proposed rule would.
Read the entire article “Defacto ‘cap’ on SEC whistleblower awards would be a big mistake,” on Forbes.com.