The Future of the SEC Whistleblower Program: Post-Election
Concerns of SEC Whistleblowers and SEC Whistleblower Lawyers,
Part 3

Over the past ten days, several clients and more than one SEC
whistleblower lawyer have asked me what I think the recent
national Presidential election results portend for the future
of the SEC whistleblower program.  In the first two Parts of
this post, I have attempted to give legislative and historical
context to this question.  In this concluding Part, I turn to
the current environment and the election itself.

As I stated in both prior Parts of this post, nothing herein
should be construed as legal advice or considered as a
substitute for consulting with your own SEC whistleblower
lawyer.  The thoughts and ideas expressed herein are my own
personal opinions based on information presently available to
me, combined with my experience representing clients as an SEC
whistleblower lawyer since shortly after the passage of the
Dodd-Frank Act, and over two decades of experience as a
practicing attorney.

*      *     *

Less than two months before the Presidential election, the
SEC’s Director of Enforcement praised the SEC whistleblower
program as having a “transformative impact” and called it a
“game changer”.  In his remarks, he noted that in fiscal year 2015 the SEC
received 30% more whistleblower tips than it had received in
fiscal year 2012, and encouraged SEC whistleblowers to report
as early as possible to the SEC.  (As an aside, if you are an
SEC whistleblower lawyer, you may also be interested to know
that in his remarks, the Director praised and welcomed the
assistance of SEC whistleblower lawyers.)

Approximately three months earlier, the Chair of the SEC
informed the U.S. Senate’s Committee on Banking, Housing, and
Urban Affairs that SEC whistleblower tips had increased each
year since the SEC whistleblower program came into existence
in 2010.  During her testimony, she told the Committee that
the SEC whistleblower program has had a “transformative impact” on the SEC’s enforcement program.

In August, the SEC announced to great fanfare that it had
given out
more than $100 million
in SEC whistleblower awards.  For approximately two months,
the SEC posted a large green banner on the landing page of its
website announcing the milestone.  A smaller version of that
banner is currently posted on the home page for the SEC’s
Office of the Whistleblower.  In remarks about the milestone,
the SEC Chair repeated her statement that the SEC
whistleblower program has had a “transformative impact”; the
Director of Enforcement reiterated that the program has been a
“game changer”; and the then-Acting Chief and now Chief of the
Office of the Whistleblower referred to the milestone as proof
of “the program’s
resounding success.”

Less than one month before the Presidential election, the SEC
announced that it gave out a
record $57 million
in awards to whistleblowers during fiscal year 2016, more than
in all previous years combined.

As I reflected on in Part 1, entire Acts or huge sections of
Acts tend to be susceptible to wholesale repeal when there is
overwhelming or unanimous consensus that the Act or those
sections of it have failed to achieve, or no longer serve,
their intended purpose.  The exact opposite is true with
regard to the SEC whistleblower program.  The SEC
whistleblower program has been widely praised as an
overwhelming success.

With regard to the recent Presidential election itself, it has
been reported that President-elect Donald Trump drew a lot of
support from the working class and middle class — in other
words, voters who tend to be employees, or former employees
whom the recession has forced out of work.  The SEC
whistleblower program’s protections and award provisions are
designed to protect, encourage, and reward employees,
along with others, who report securities frauds and violations
to the SEC.  Repealing the SEC whistleblower program would be
viewed as striking out at employees and the working/middle
classes — a very sizeable component of the electorate that
voted President-elect Trump into office — in favor of
protecting the very “establishment” that Mr. Trump campaigned
so vigorously against.  While nothing is certain, it seems
unlikely to me that the President-elect would do something
that could be construed against him in this way and
potentially alienate a large percentage of his supporters.

So what are the possible outcomes for the Dodd-Frank Act? 
First off, it is possible, even if less likely post-election,
that nothing will be done and the Act will be left as is.  It
could be that certain sections of the Dodd-Frank Act will be
amended or removed, leaving the remainder of the Act,
including the SEC whistleblower provisions, intact.  Or it
could be that the entire Act will be repealed and replaced
with a new financial reform Act.  Finally, and least likely
for reasons I have discussed, the Act could be repealed
without the passage of a new Act to replace it.

It is important to remember that, as I mentioned in Part 1,
the SEC whistleblower provisions are stand-alone provisions. 
They are separate from the financial and reporting provisions
that seem to be the focus of the repeal movement.  It is
entirely possible to amend or repeal those other provisions of
the Dodd-Frank Act while leaving the SEC whistleblower
provisions intact.  It is also possible to move the SEC
whistleblower provisions into a new Act without interrupting
the operation of the SEC whistleblower program.  It may also
be possible to lift the SEC whistleblower provisions out of
Dodd-Frank and place them into the Securities Act of 1933 or
the Securities Exchange Act of 1934 through direct stand-alone
amendments to those Acts, without attaching them to the
Dodd-Frank Act or any replacement Act as a vehicle.  The SEC
whistleblower provisions could even be crafted into their own
stand-alone Act separate from everything else, without
disrupting the continuity of the SEC whistleblower program.

For the reasons I have explained above and in Parts 1 and 2,
while nothing can be predicted with certainty or guaranteed,
whatever the ultimate outcome for the Dodd-Frank Act may be,
it strikes me that the most probable outcome will be that the
President-elect and Congress will find a way to carve out and
preserve the well-regarded and highly successful SEC
whistleblower program.  How the whistleblower provisions
actually look when all is said and done will likely depend on
whether Congress chooses to amend the Dodd-Frank Act or repeal
it in its entirety and replace it with something else.

As I am sure many of you will be, I will be keeping an eye on
future developments, as the legislative process continues
under the new Presidential administration and new information
comes to light.  In the meantime, I encourage everyone to have
faith and stay the course until we all see what actually
happens next year and beyond.

<- For Part 1 of this Post, click
here.

<- For Part 2 of this Post, click
here.

* * *

About the Pickholz Law Offices LLC

The Pickholz Law Offices LLC is a law firm that focuses on
representing clients involved with investigations conducted by
the U.S. Securities and Exchange Commission, FINRA, and other
securities regulators.

The Pickholz Law Offices has represented employees, officers,
and others in SEC whistleblower cases involving financial
institutions and public companies listed in the Fortune Top
10, Top 20, Top 50, Top 100, Top 500, and the Forbes Global
2000. We were the first law firm ever to win an SEC
whistleblower award for a client on appeal to the full
Commission in Washington. Inside Counsel magazine named this
achievement one of the five key events of the SEC
whistleblower program. Examples of the
Firm’s SEC whistleblower cases are available here.

In addition to representing SEC whistleblowers, since 1995 the
Firm’s founder, Jason R. Pickholz, has also represented many
clients in securities enforcement investigations conducted by
the SEC, FINRA, the U.S. Department of Justice and US
Attorney’s Offices, State authorities, and more. Examples of
some of the many
securities enforcement cases that Mr. Pickholz has been
involved with are available here.

You can see what actual clients have had to say about The
Pickholz Law Offices by going to the
Client Reviews page on our website or by clicking here.

How to Contact the Pickholz Law Offices LLC

If you would like to speak with a securities lawyer or SEC
whistleblower attorney, please feel free to call Jason R.
Pickholz at 347-746-1222.

The Pickholz Law Offices remains open and will be fully
operational through teleworking while we all grapple with this
terrible pandemic. We hope that all of our clients,
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healthy. Our thoughts and prayers go out to everyone who has
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