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SEC whistleblower office put on hold

By Phillips & Cohen LLP

A delay in funding for the Securities & Exchange Commission whistleblower program means that investors will continue to lose millions through undetected ponzi schemes and other securities fraud.

Citing "budget uncertainty" the agency said that the functions the whistleblower office would have assumed will be temporarily assigned to existing staff within the Division of Enforcement.

The new Dodd-Frank financial overhaul law requires the SEC to write more than 100 new rules and gives the agency new authority to police hedge funds and derivatives dealers. The SEC is also expecting a flood of tips about alleged corporate fraud from whistleblowers, both because of the expansion of fraudulent activities now covered and the increase in possible awards. The new whistleblower office will be responsible for deciding which claims have merit.

Dodd-Frank mandates an increase in the SEC's budget but that money must be appropriated by Congress. Most Republicans opposed the law and may not be inclined to allocate the funds.

Full post as published by False Claims Act - Qui Tam on December 04, 2010 (boomark / email).