September 30, 2021

Whistleblower Bars: The SEC Takes Action on Frivolous Claims

Earlier this week, the SEC announced that it had barred two individuals from the whistleblower award program. According to the SEC, each of these individuals filed hundreds of frivolous award applications.

These bars were issued pursuant to the 2020 amendments to the SEC’s whistleblower program rules. New Exchange Act Rule 21F-8(e) authorizes the Commission to permanently bar a claimant from the Whistleblower Program based on submissions or applications that are frivolous or fraudulent, or that otherwise hinder the effective and efficient operation of the Whistleblower Program. The SEC’s adopting release for this rule defines “frivolous claims” as “those that lack any reasonable or plausible connection to the covered or related action.”

These bars are permanent, applying to any pending applications from the claimant at any stage of the claims review process as well as to all future award claims.

– Dave Lynn