SEC Modifies Whistleblower Program to Reverse Trump-Era Change

The Securities and Exchange Commission, responding to concerns voiced by advocates, voted Friday to remove a limit on whistleblower awards that was set during the Trump administration.

The change by the Democratic-majority SEC eliminates the Wall Street regulator’s ability to deny awards to tipsters who might otherwise be eligible for a payout from another agency.

The vote reverses a change made to the whistleblower program in 2020, when the SEC was led by Chairman Jay Clayton, a political independent nominated by President Trump. 

On Friday, the SEC also voted for a second amendment clarifying that commission has the authority to consider the dollar amount of a potential award, but only for the purpose of increasing a payout. 

The move “will give whistleblowers additional comfort” that SEC won’t reduce an award simply because it is large, Chairman Gary Gensler, a Democrat nominated by President Biden, said in a statement. 

The second amendment clarifies language changes made to the award-program rules. Mr. Gensler said SEC would pause enforcing Trump-era modifications. The agency proposed changing its rules in February.

This is a big win for investors, whistleblowers and the public.