Will Whistleblower Claims Give Rise to More SEC Enforcement Actions?
The Dodd-Frank Act’s whistleblower protection provisions will go into effect no later than nine months after July 22, 2010. When they do, it will be interesting to see if they result in the exposure of more compliance failures, such as the ones that formed that basis for an enforcement action recently brought by the SEC. Although under the Dodd-Frank Act’s whistleblower protection provision’s threshold of $1 million, the compliance failures alleged – failure to establish, maintain and enforce written policies and procedures reasonably designed to prevent misuse of material, nonpublic information – would seem to be good fodder for a Dodd-Frank whistleblower claim. We note that the investment adviser, broker-dealer and chief compliance officer neither admitted or denied the SEC’s findings in connection with the settlement.
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