M E M O R A N D U M
To: Reporters and Editors
Re: SEC approves whistleblower rules
Da: Wednesday, May 25, 2011
Sen. Chuck Grassley of Iowa helped to enact provisions beefing up the Securities and Exchange Commission's treatment of whistleblowers. Earlier this month, Grassley urged the SEC Chairman to revamp an earlier version of the rules floated by the agency and move them in the direction of those approved today. Grassley was the Senate author of the 1986 whistleblower amendments to the federal False Claims Act, which has become one of the government's most powerful tools against fraud. He also was key to improving the IRS' whistleblower office. He made the following comment on the SEC's approval today of new rules giving whistleblowers incentives to come forward about financial fraud.
In general, there's a long history of retaliation against whistleblowers. To come forward, they need protection and independence from the operation that's potentially doing wrong. The SEC took a step in the right direction today. A whistleblower might prevent the next Madoff. Twenty years ago, the Justice Department resisted whistleblowers. Since then, whistleblowers have helped the department recover $28 billion that otherwise would have been lost to fraud. More recently, there was a lot of skepticism about beefing up the IRS' whistleblower incentives. That office recently recovered $20 million for the taxpayers in the first reward under the new set-up. Both of these programs faced some of the same criticisms facing the SEC program but the concerns were overstated. Now, the SEC needs to break away from its past of resisting whistleblowers. It needs to make sure whistleblowers are taken seriously and that their complaints are given the attention needed to prevent fraud.