Page 43 - Investment Advisor September 2021
P. 43
THE PLAYING FIELD
By Melanie Waddell
SEC’s Gensler Sets Stage to Reverse
Controversial Whistleblower Rules
Two amendments made under the previous SEC chief could discourage
whistleblowers from coming forward, the agency chairman said.
ecurities and Exchange staff to prepare for the commission’s
Commission Chairman Gary consideration later this year “potential
SGensler is seeking to reverse revisions to these two rules that would
last year’s changes made to the agen- address the concerns that these recent
cy’s whistleblower rules under its amendments would discourage whistle-
former chairman, Jay Clayton. Last blowers from coming forward.”
September, the agency, under Clayton, In particular, Gensler explained,
adopted amendments to the SEC’s the staff is considering “whether our
whistleblower program rules that rules should be revised to permit the
some complained were a gift to Wall Commission to make awards for related
Street and discouraged whistleblow- actions that might otherwise be cov-
ers from coming forward. ered by an alternative whistleblower
The agency under Clayton said program that is not comparable to the
the changes to the those rules would SEC’s own program, and to clarify that
enhance claim processing efficiency, the Commission will not lower an award
Last September, the and clarify and bring greater transpar- based on its dollar amount.”
Along with those statements, Gensler
agency, under [SEC ency to the framework used by the issued in early August a procedural
commission in exercising its discretion
Chairman Jay] in determining award amounts. statement on how the SEC would pro-
Gensler noted in an early August state-
Clayton, adopted ment that members of the whistleblower ceed regarding certain whistleblower
rules while the staff is preparing and
amendments to the community, as well as Democratic SEC the commission is considering potential
Commissioners Allison Herren Lee and
amendments to those rules.
SEC’s whistleblower Caroline Crenshaw, “have expressed
program rules that concern that two of these amendments GENSLER MOVE IS OUT OF BOUNDS,
could discourage whistleblowers from
GOP COMMISSIONERS SAY
some complained coming forward.” The two SEC commissioners, Hester
One amendment “would preclude
were a gift to the Commission in some instances from Peirce and Elad Roisman, shot back in a
joint statement that Gensler’s action is
Wall Street and making an award in related enforce- out of bounds.
While the agency is within its author-
ment actions brought by other law-
discouraged enforcement and regulatory authorities ity to engage in a notice and comment
whistleblowers from if a second, alternative whistleblower rulemaking to amend its whistleblower
award program might also apply to the
rules, Peirce and Roisman said, Gensler’s
coming forward. action,” Gensler said. “new procedures designed to ensure that
The second could be used by a two rule provisions, which are subject
future commission to reduce an award to litigation, are substantively ignored
because of the size of the award in while proposed amendments are formu-
absolute terms. lated and considered” effectively nulli-
Gensler said that he’s directed SEC fies standing commission rules.
SEPTEMBER 2021 INVESTMENT ADVISOR 41
