SEC Clarifies Whistleblower Definition and Protection Policy
Article 2 minute read

SEC Clarifies Whistleblower Definition and Protection Policy

19 October 2015

The broad definition of the term whistleblower has been used to describe a person who reports violations of securities laws. However, in terms of the SEC’s whistleblower policy, there was some discrepancy regarding when the protection that whistleblowers are afforded under law actually takes effect.

Written by: CT Corporation

The SEC has issued an interpretive rule explaining that whistleblowers do not need to report to the commission in order to be eligible for protection from employee retaliation.

Under the Dodd-Frank Act, there were two provisions that extended protection against retaliation to any whistleblower who reported company misconduct. The unclear aspect was who was to receive the report. In one provision the whistleblower could report the transgression internally; in another provision the whistleblower was defined as such when he or she reported violations of securities law directly to the SEC.

On August 4, 2015, the SEC released a statement intended to provide clarity in these dual whistleblower definitions as outlined in the Dodd-Frank Act. A whistleblower is entitled to the protection afforded them by the Dodd-Frank Act provisions for anti-retaliation protection even if they do not report the wrongdoing to the SEC. However, the statement further explained that in order for a whistleblower to be entitled to the awards and confidentiality extended to by the Dodd-Frank Act, they must make a report to the SEC detailing the violations of securities law.

Following the SEC’s release on August 4, 2015, Senator Jack Reed (D-Rhode Island) introduced S.1960, a bill that extends the current five-year timeframe that the SEC has to enforce reported violations in securities law to ten years after the date the violation occurred.

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