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SEC Fixes Flawed Provision in Whistleblower Rule

Investment and public interest groups applaud recent changes in Securities and Exchange Commission (SEC) rules. After previous efforts to weaken these rules, the SEC restored the regulations to better award whistleblowers and protect investors.

An effective approach

The whistleblower rule dates back to 2011. They awarded over $1 billion to whistleblowers who revealed insider trading and hidden corporate schemes. Many of these incidents would have remained hidden if not for whistleblowers. Therefore, the rules include financial incentives for employees and executives who report corporate wrongdoing.

The monetary award systems proved effective quickly. Whistleblower information resulted in $5 billion in economic sanctions and recovered over $3 billion in ill-gotten gains. The SEC returned more than $1.3 billion to defrauded investors.

The new changes

The previous administration watered down the money award provisions and made them less specific. Its new rule provisions allowed the SEC to reconsider money awards to whistleblowers and decrease them significantly. Whistleblowers were less likely to report fraud and illegal behavior without knowing their possible awards.

Seeing how this can decrease reports, the SEC changed the rules to something more effective. Its new provisions allow it to reconsider awards only to increase them, not reduce them. This approach enables whistleblowers to know their information has a minimum value and helps them report incidents without fear.

Investor groups report that the changes will encourage more people to report corporate crime, allowing the SEC to better protect investments and retirement accounts. They applaud the current fix and its likely effects on fraud prevention.

Whistleblower laws protect from employer retaliation when employees and executives report illegal activity. However, these reports often come at a cost despite these supportive laws.

The Kardell Law Group represents clients who need whistleblower protection. Contact a seasoned whistleblower attorney today to schedule a consultation.

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In his new book, "Standing Up to China: How a Whistleblower Risked Everything for His Country," former client & Author, Ashley Yablon, quotes Attorney Steve Kardell about Whistelblower Law.
  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

  • "Incredible knowledge of employee related concerns and equally brilliant knowledge of health care regulations, standards of practice. I would recommend this firm to anyone."  -V.B.

  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

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