A $2.5M award announced last week included a footnote delineating who, among government employees, is eligible for SEC whistleblower awards. Employees of local, state, and federal agencies, other than regulatory, or law enforcement agencies, are eligible for awards. Which agency this whistleblower worked for was not revealed. Notable excluded regulatory agencies include the SEC itself, the Office of the Comptroller of Currency, the Federal Reserve, and the FDIC. This new authority is the most broad interpretation of which government employees can we SEC whistleblower the commission has issued to date.
The SEC whistleblower program has been extremely successful, awarding $158M to 46 whistleblowers since its inception in 2011. Many hope the SEC’s recent interpretations encourages more government employees with knowledge of fraud to report it to the SEC. Critics of the footnote say that it encourages “hair splitting” over what is an eligible law enforcement organization, a term not explicitly defined in the statute, the regulations, or the footnote. The footnote said that the exclusion does not apply to agencies with law enforcement “components” when law enforcement is that agency’s overall mission.
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