Andy Wise discusses the Securities and Exchange Commission’s new whistleblower rules, which some say have built in exclusions leaving the door open for less-scrupulous attorneys to attempt to collect whistleblower bounties. Regarding the rules, Wise comments that “It's really the first two that cause some concern, because of their breadth and because of the way the government has determined what constitutes fraud in the attorney-client relationship in recent years.” The concern is that attorneys may feel that if they were to get a tip on some potentially major, and lucrative, wrongdoing, they would be entitled to cash in because of the fraud exception, he says. “Attorneys that are in this scenario are going to be privy to some of the most sensitive information out there,” Wise says.
Wise noted that several critics called for attorneys to be exempted from the whistleblower rules altogether. But the Dodd-Frank Wall Street Reform and Consumer Protection Act that compels the SEC to set up the bounty program, and the Sarbanes-Oxley Act passed in the wake of the Enron and Worldcom scandals, requires attorneys to be included.