In November 2019, the U.S. Securities and Exchange Commission released two separate annual reports setting forth expected new policies and highlighting recent practices designed to further incentivize individual whistleblowers and cooperating companies to report and address violations of the securities laws.

First, the Commission released its annual report to Congress on its whistleblower program, under which the Commission provides monetary awards to eligible whistleblowers who provide original information leading to successful enforcement actions. See SEC, 2019 Annual Report to Congress, Whistleblower Program (Nov. 15, 2019) (2019 Annual Whistleblower Report). In the report, the Commission stated that it anticipates adopting certain amendments to the program rules this year, which Chairman Jay Clayton expects will further “incentivize whistleblowers to provide valuable information to aid the Commission in protecting investors and markets.” SEC Public Statement, Chairman Jay Clayton, Statement on Whistleblower Program 2019 Annual Report to Congress (Nov. 15, 2019). A key amendment would allow the Commission to make award payments to whistleblowers on the basis of deferred prosecution agreements (DPA) and non-prosecution agreements (NPA) entered into by the U.S. Department of Justice or a state attorney general in a criminal case, as well as settlement agreements entered into by the Commission outside the context of a judicial or administrative proceeding. These amendments are a positive enforcement development because they allow whistleblowers to be compensated beyond the narrow category of formal judicial or administrative proceedings. This will ensure that whistleblowers are not disadvantaged by the particular form of an action that is ultimately pursued.

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