No legal challenges were brought against the program despite worries over how it will affect internal compliance procedures
On Friday the SEC’s new whistleblower program took effect, allowing company employees to profit from reporting securities law violations to the regulator.
Under the program, whistleblowers will be eligible for a financial reward if their tip leads to an enforcement action and a fine of more than $1 mn.
The reward would be 10 percent-30 percent of the fine, so whistleblowers could end up receiving substantial amounts of money for tipping off the regulator.
The SEC has set up a new website providing information on the program, which includes directions on how to submit a tip and frequently asked questions.
The program includes incentives for whistleblowers to report violations internally first, although it does not require them to take this step.
Awards can be reduced if the whistleblower misled any internal compliance investigation prior to submitting a tip.
In the months leading up to the program taking effect, companies and legal experts warned that it could undermine companies own internal reporting systems.
In the end, however, the SEC says no legal challenges were filed against the program, reports Reuters. The regulator is ready to make changes to the program if problems with it arise, adds the news organization.
The whistleblower program – introduced as part of the Dodd-Frank Act – was adopted by SEC commissioners in May following a tight 3-2 vote in favor of the new system.
