Daily Market Commentary for December 14, 2011
Nasdaq Composite has already violated major support, raising a technical caution flag. (read more at Millennium-Traders.Com)
In a letter to Rep. Barney Frank (D., Mass), Securities and Exchange Commission Chairman Mary Schapiro said the whistleblower program, which was mandated by 2011 Dodd-Frank regulatory overhaul, is already providing "significant benefits." Schapiro told a key House Democrat today that the SEC's new whistleblower program is already yielding results and lawmakers should hold off making changes to it until there is proof that it is causing problems. "Making significant changes in the program before it has had an opportunity to demonstrate its full value seems premature, particularly in the absence of any evidence of problems with the current program," Schapiro wrote. Schapiro's letter comes as a House Financial Services' panel is expected to vote on a bill later today that would make several changes to the whistleblower program, which would include requiring potential whistleblowers to report wrongdoings first to their company unless the SEC determines there was evidence that the company's top management participated in the fraud or that the company showed bad faith. The bill which was introduced by Rep. Michael Grimm (R., N.Y.), reflects corporate concerns that the promise of multimillion-dollar payouts will undercut hotlines and other internal reporting channels companies enacted after the 2002 Sarbanes-Oxley law. In Schapiro's letter to Frank, requiring internal reporting except in narrow instances is likely to "have a chilling effect" on whistleblowers which can reduce the flow of tips the SEC receives. Requiring to report internally first might undermine the anonymity that is important to whistleblowers that may fear retaliation. Affective August 12, the SEC's program offers monetary awards to individuals who come forward with new information that leads to a successful SEC case resulting in penalties of at least $1 million with awards ranging from 10% to 30% of the total collected . The award amounts are based on several factors, including whether the whistleblower tried to report the wrongdoing within the company before coming to the SEC. SEC officials have said the program is carefully designed to ensure that would-be whistleblower tips to the SEC won't conflict with companies' internal efforts to gather information about potential problems. Schapiro said in her letter that the program already incentivizes whistleblowers to report internally while preserving their discretion to come to the SEC "when appropriate." A whistleblower can receive an award for reporting new information to a company's internal compliance and reporting systems, if the company then reports to the SEC information that leads to a successful agency action. In the seven weeks when the final rules became effective and the September 30 financial year's end, the SEC reported it received 334 whistleblower tips.
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