Reforming Dodd‐Frank from the Whistleblower's Vantage

Abstract

Whistleblowing is a critical component of corporate integrity and economic stability in the United States. It is unsurprising, then, that policy makers and observers have directed considerable attention to the improvement of whistleblower laws. This article assesses potential improvements to the most visible recent addition to the federal whistleblower regime—the Dodd‐Frank Act, passed in the wake of the Great Recession to combat securities fraud. The article makes two overarching claims. First, the Securities and Exchange Commission's (SEC) recently adopted changes to the administrative rules governing the Dodd‐Frank whistleblower program (WBP) are incomplete since they were formulated without reference to the experiences of whistleblowers and their counsel. Moreover, at least three of the SEC's adopted changes will undermine the WBP and should be repealed. Second, the time is right to experiment with improvements to the WBP. If the SEC's new rules are not the optimal path forward, the question remains what alternative changes should be adopted. To that end, the article utilizes an original qualitative data set consisting of in‐depth interviews with two dozen whistleblower counsel, two whistleblowers, a former SEC commissioner, and a former chief of the SEC's Office of the Whistleblower to propose its own set of changes. Congress and the SEC should embrace these changes to reform Dodd‐Frank from the whistleblower's vantage and to move the WBP closer to its full potential as a deterrent and remedy for securities fraud.