Tariffs-Free Regulatory Importing?
Asad Akhtar
Regulation 21F, introduced under Dodd-Frank, permitted the agency to award between ten to
thirty percent of any successfully recover amount over $30 million. This regulation also includes
provision to prevent employers from retaliating against employees who disclose violations to the
SEC. However, conflicting views from the judiciary on the eligibility of employees to qualify
for anti-retaliation under Dodd-Frank if they utilize internal reporting mechanisms has casted
doubt on this protection. In practice, the SEC’s incentivized program has been successful in
generating a high number of quality tips that have led to successful enforcement action in
complex frauds. However, the contingent nature of the rewards and lack of transparency in the
administration of the program remain lingering issues.
Under Proposed Policy 15-601, the OSC seeks to introduce a whistleblower program that
is substantially similar to the SEC’s program with some notable exceptions. Distinctively, the
OSC’s program will provide a guaranteed award between five to fifteen percent of total
monetary sanctions imposed over $1 million, to the maximum amount of $1.5 million.
Additionally, if the OSC is able to successfully collect sanctions that exceeds $10 million, the
maximum reward will increase to $5 million. The OSC will also strongly suggest legislative
amendments to the Act to clarify that whistleblowers will still qualify for anti-retaliation
protection if they report violations through other mechanisms. These distinctions provide a clear
advantages over the SEC’s framework but some challenges still exist with potentially
incentivizing actors to behave poorly and the lack of clarity regarding how awards are calculated
and disclosed. Ultimately, Proposed Policy 15-601 has the potential to help the agency detect
complex frauds while sufficiently protecting and rewarding the whistleblower.
Part Three examines the OSC’s recent adoption of no-contest settlements. No-contest
settlements allow a respondent(s) to settle with the OSC without admitting guilt. No-contest
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