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SEC issues rules implementing Dodd-Frank whistleblower provisions

08 June 2011

SEC Update

On May 25, the SEC issued a new Regulation 21F under the Exchange Act to implement the whistleblower directive under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Section 922 of Dodd-Frank added Section 21F to the Exchange Act to establish a program for incentivizing individuals to act as whistleblowers regarding violations of the federal securities laws. The SEC adopted the controversial new regulation after considering more than 240 comment letters on its rule proposal and over the dissenting votes of two of the five Commissioners. Under its whistleblower program, the SEC is authorized to pay awards of between 10% and 30% of the amount recovered to individuals who voluntarily provide the SEC with original information about a possible violation of the federal securities laws that leads to an enforcement action resulting in monetary sanctions exceeding $1 million. The SEC's Office of the Whistleblower will administer the program. Regulation 21F will be effective on August 12, 2011 and is described in Release No. 34-64545.



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