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June 23, 2020

SEC’s Whistleblower Program Under Threat

The SEC Whistleblower Protection and Rewards Program, one of the most successful programs established by the Dodd-Frank Act, is under threat following proposed changes by the SEC that would discourage whistleblowers from reporting illegal activity. Better Markets is fighting to preserve the successful program. 

Since the start of the whistleblower program in 2011, the SEC has attracted more than 33,300 high-quality tips, market intelligence and information from individuals in 123 countries. That has resulted in the SEC recovering nearly $2 billion from fraudsters who violated securities laws and SEC rules, including more than $1 billion in disgorgement of ill-gotten gains and interest. Of this $2 billion, nearly $500 million has been or is scheduled to be returned to investors. This is due to whistleblowers who have provided the SEC with critical information that enable it to identify and prosecute fraud and other violations.

Earlier this month, Better Markets released a comprehensive white paper on the SEC whistleblower program that provided background as well as analysis of the program. In the document, we track and describe the recent activities of the program, which are not captured by any reports from the commission.

Yet, despite the program’s success, the SEC has proposed dangerous changes that risk discouraging whistleblowers from going to the SEC to expose illegality. These changes, if finalized as proposed, would expose investors to needless harm and allow fraudsters to remain on the loose. The white paper details the risks of the SEC’s proposal.

In the white paper, author Lev Bagramian, senior securities policy advisor with Better Markets, wrote: “Given the SEC’s unfortunate history of ignoring if not mistreating whistleblowers, including its dereliction of duty regarding the Madoff investment scandal, it should act with maximum caution and humility in attempting to tamper with a wildly successful program that has helped millions of investors and punished lots of fraudsters.”



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