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April 12, 2022

SEC Proposal on Whistleblower Program Is a Positive Step But There’s Still Room for Improvement

WASHINGTON, D.C.—Legal Director and Securities Specialist Stephen Hall issued the following statement on the filing of Better Markets’ Comment Letter to the Securities and Exchange Commission (SEC) on the agency’s proposal to rollback harmful limits on whistleblower awards:

The SEC’s whistleblower program has been an enormous success, yet in 2020, the SEC adopted rules that created uncertainty in the process and established obstacles for whistleblowers, who deserve to be well-rewarded for coming forward with often hard-to-uncover evidence of illegal conduct.  We applaud the SEC for taking steps to neutralize those misguided rule changes.  However, it’s clear that more can and should be done to ensure that whistleblowers are fully incentivized to provide information, often at great personal cost, that is critical to successful enforcement of the securities laws.

“Under the program, established in the Dodd-Frank Act, the SEC is required to pay whistleblowers between 10% and 30% of any monetary sanction exceeding $1 million that the SEC obtains in an enforcement action based on the information or independent analysis provided by the whistleblower.  It also requires the SEC to make an award for successful actions brought by other agencies based on the whistleblower’s information, known as ‘related actions.’ The program has amassed an impressive record as a law enforcement tool, as whistleblowers have enabled the SEC to obtain billions of dollars in sanctions and disgorgement, including more than $1.3 billion slated for return to investors.  But as if to snatch victory from the jaws of defeat, the 2020 rule changes made it more difficult for whistleblowers to collect an award based on related enforcement actions, gave the SEC unfounded authority to arbitrarily reduce award amounts, and erected unnecessary hurdles for whistleblowers seeking to collect awards on the basis of their independent analysis.

“As we argue in our comment letter, the SEC’s proposal goes a long way toward fixing these problems.  It would make clear that the SEC won’t use its discretion to lower the dollar amount of awards, and it would ease—but not eliminate—restrictions on awards for related actions.  We urge the SEC to go further.  It should completely jettison the flawed 2020 approach to related actions and revert to a simple rule that tracks the statute.  And it should remove the obstacles, adopted in guidance, facing whistleblowers who provide independent analysis.”

Read our full Comment Letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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