November 3, 2010

Whistleblowers: Change in the Playing Field?

Last week, the SEC released this first annual report to Congress regarding the state of its whistleblower program – the report shows that the SEC has put $451.9 million into a new fund to pay whistleblowers (Dodd-Frank requires a minimum of $300 million).Today, the SEC will hold an open Commission meeting to consider proposals to implement Dodd-Frank’s whistleblowing provision, Section 922.

In our “Whistleblower” Practice Area, we’ve posted numerous memos about the SEC’s new bounty program under Dodd-Frank. Perhaps this provision is the “sleeper” of the Act because so many folks have complained about it. For example, read this entry in “The Mentor Blog,” this piece from the “D&O Diary” or this one in Mike Melbinger’s blog on (or this WSJ article or this NY Post piece). All of these express concerns over the provision – and note how companies may want to change their internal whistleblower procedures in response.

Some entrepreneurial lawyers have caught on to the potential pot of gold offered by the new bounty program. For example, as noted in this New York Post article, there is a whistleblowing ad appearing in the theaters of Manhattan. The lawyer’s “SEC Snitch” site includes the commercial. I imagine we are just starting to scratch the surface of how this area will evolve…

Check out this interesting blog from Harvard Business Review about how crowdsourcing could potentially help the SEC’s whistleblowing efforts.

Dodd-Frank: SEC Moves Up “Accredited Investor” Rulemaking Schedule

On Monday, the SEC updated its “Implementation of Dodd-Frank page, mainly to provide more detail about which rulemakings will take place this month (whistleblowing; investment advisers; derivatives; Office of Investor Advocate) – many of which will be considered at today’s open Commission meeting.

The January-March schedule was also updated to move up proposals now set for that time period regarding Sections 413 and 926 that will revise the “accredited investor” standard and who is disqualified to offer securities in an exempt offering. Previously, these were set to come out in the April-July timeframe.

SEC Staff Report: A Review of XBRL Filings

On Monday, the SEC’s Division of Risk, Strategy and Financial Innovation issued this report that reviews interactive data filings submitted by companies during this past summer and lists a number of common issues in the form of “observations” (which I guess will be RiskFin’s terminology rather than any of the vehicles that Corp Fin uses; ie. Staff Legal Bulletins, “Dear CFO” letters, etc.). It doesn’t appear that individual comment letters were sent out to companies whose XBRL filings were reviewed by RiskFin, at least not at this stage of the XBRL roll-out…

– Broc Romanek