The Washington, D.C. based whistleblower protection law firm, Kohn, Kohn & Colapinto (KKC), recently filed a 27-page letter with the Securities and Exchange Commission (SEC) commenting on the amendments proposed by the SEC to alter its Whistleblower Program. KKC filed the letter as a public comment to the SEC to highlight serious flaws in the proposed amendments that will result in major setbacks to the advancements made in the use of whistleblower incentives to uncover major corporate fraud in the past few decades.
The whistleblower advocates expressed concern stating, “the proposed amendments will undermine the rules governing a successful whistleblower program.” KKC also outlined shortcomings of the amendments, including the use of harmful caps on rewards, clarifying the definition of compliance, and explaining how further delays to current whistleblower cases would only harm those reporting the wrongdoing.
Whistleblower attorney, Stephen M. Kohn, partner at KKC and executive director of the National Whistleblower Center, described the major weaknesses of the proposed amendments: “The proposed rules will have a serious crippling effect on corporate compliance and reporting high level fraud. Without large rewards to incentivize Wall Street whistleblowers, there will be less accountability and more corruption in the workplace. Placing a cap on the percentage of an award to highly compensated executives will impair the goal of persuading key employees to step forward and report wrongdoing. Reducing whistleblower rewards will open the door for continued major corporate fraud and turn away those with valuable evidence of crime from stepping forward.”
After proposing the amendments in a June 29th meeting, the SEC published the proposed changes on Friday, July 20th, 2018. The proposed rules amendments are open for public comment until September 18, 2018.