Corporate America Weighs In On SEC Whistleblower Rules

More than two dozen large U.S. companies including Google, Inc. and General Electric Co. have written letters to the Securities and Exchange Commission asking the agency to revise its proposed rules for awarding bounties to workers who report corporate fraud or wrongdoing. They want the SEC to require that workers report wrongdoing to employers in order to be eligible for payments under the agency's proposed "whistleblower" program.

Lawyers for whistleblowers contend that any requirement for internal reporting would kill the program because it would discourage a potential whistleblower coming forward for fear of being identified.

The bounty for whistleblowers program was created by the Dodd-Frank financial-overhaul law passed last year. The SEC has until April to finalize rules of implementation.

The SEC's draft rules proposed in November 2010 would not require whistleblowers to report suspected fraud or wrongdoing to their employers in order to participate in a bounty.

Some lawmakers may object to raising more hurdles to reward whistleblowers because of the SEC's initially brushing off warnings about Bernard Madoff's Ponzi scheme.

One Senator, Charles Grassley (R., Iowa), said whistleblowers should be entitled to "an independent and impartial review without putting a target on their backs".

Source:
Companies Prod SEC on Whistleblower Proposal, The Wall Street Journal, February 17, 2011