SEC to vote on paying tipsters
Steve Chiotakis: The Securities and Exchange Commission votes today on how corporate whistle-blowers will be compensated for their deeds. The Dodd-Frank financial reform law created new rewards for corporate tipsters. But the law left it up to the SEC to decide how exactly to do that.
Marketplace’s Nancy Marshall Genzer reports.
Nancy Marshall Genzer: The biggest sticking point is whether tipsters have to report suspected wrongdoing to their bosses before or as they blow the whistle. Financial Services Roundtable chief lobbyist Scott Talbott says that would give companies a chance to solve problems themselves.
Scott Talbott: That the company is in the best position to take corrective action to end the activity that’s in question.
Talbott says otherwise, whistleblowers could be tempted to make false claims to earn a big bounty. They stand to get 10 to 30 percent of any penalty or money the SEC recovers. The whistleblower rule is designed to prevent large-scale fraud, like the Bernie Madoff Ponzi scheme. The National Whistleblowers Center says tipsters need a big financial incentive to come forward without telling their bosses. The Center’s executive director, Stephen Kohn, says they’re afraid of losing their jobs.
Stephen Kohn: If you force them to go within their company, many of them will remain silent.
The SEC may not get the last word. Its rule could be re-written by Congress or challenged in court.
In Washington, I’m Nancy Marshall Genzer for Marketplace.
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