Today's CPA - 5

ACCOUNTING & AUDITING
iStock.com/Cristian Storto Fotografia

SEC WHISTLEBLOWER
PROGRAM UP FOR REVISIONS

T

he role of the whistleblower
is nothing new in the world
of financial reporting and
the continuous effort to
preserve the integrity of the
financial markets. The Dodd-Frank
Act (2010) created the Office of the
Whistleblower in the Securities
and Exchange Commission (SEC)
as an avenue for knowledgeable
individuals to report financial
wrongdoing and protect investors.
Over its years in operation, the
program has demonstrated its
effectiveness in assisting the SEC in
its responsibility to enforce federal
security laws. Information provided
by whistleblowers has led directly to
the agency ordering over $1.4 billion
in financial remedies, including
$740 for disgorgement of gains and
related interest, most of which has
been returned to wronged investors.

The SEC is proposing significant
amendments to the program, some
of which have met with criticism
from various interests while being
endorsed by others, particularly
business and trade groups.
One revision that has been criticized
as possibly discouraging reporting
focuses on how whistleblowers
must report claims. If accepted,
whistleblowers will be required
to report to the Commission "in
writing." This change stems from the
Supreme Court decision in Digital
Realty Trust, Inc. v. Somers, which
found that the SEC's employment
retaliation protection did not extend
to whistleblowers who reported
through internal company reporting
systems.
The court held that a uniform
definition of a "whistleblower"

By Don Carpenter, MSAcc/CPA
for all aspects of the program
was necessary, including the
employment retaliation protection
provisions. Whistleblowers would be
required to report through the SEC's
online portal or on Form TCR. Critics
raise the concern that this may
discourage potential whistleblowers
from coming forward.
Another major area of revision
concerns frivolous or false claims. A
proposed rule change would allow
the SEC to permanently bar an
individual from seeking an award
after he/she has been found to be
abusing the program by submitting
three or more frivolous reports.
The revision would also allow the
Commission to dispense with
contested decisions regarding
denied awards through a summary
disposition process. This new
Today's CPA September / October 2020 5



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Today's CPA

Table of Contents for the Digital Edition of Today's CPA

Front Cover
APS Ad
Table of Contents
Chairmans Message
Accounting and Auditing
Today's CPA - Front Cover
Today's CPA - Chairmans Message
Today's CPA - Accounting and Auditing
Today's CPA - 6
Today's CPA - 7
Today's CPA - 11
Today's CPA - 12
Today's CPA - 13
Today's CPA - 14
Today's CPA - 15
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