May lawyers ethically collect whistleblower bounties from the government in exchange for revealing confidential client information to the Securities and Exchange Commission? Regulations promulgated by the SEC under the authority of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 permit the payment of bounties to whistleblowers who report corporate wrongdoing to the government. These bounties can be quite substantial, and can range from 10 percent to 30 percent of the amount of the fine ultimately levied by the SEC, the U.S. Department of Justice, or the Commodity Futures Trading Commission. Given recent fines extracted by the government, the potential bounties can be eye-popping indeed. On Oct. 1, 2013, the SEC announced the payment of a $14 million bounty to an anonymous tipster under the Dodd-Frank whistleblower program.1

What does whistleblowing have to do with lawyers? The SEC’s public pronouncements on the topic reassure the practicing bar that lawyers are not required or expected to cash in on client confidential or privileged material. SEC Rule 21F-4(b) presumptively excludes the use of privileged or confidential information from its definition of eligible original information under the Dodd-Frank whistleblower rule.2 But there are exceptions to the SEC’s proscription on lawyers as whistleblowers for money. Where permitted by state ethics rules, and in the event of client perjury, SEC regulations permit a lawyer to collect a whistleblower bounty.

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