The SEC held a very busy open meeting yesterday, voting on the following final and proposed rules:

• A proposal to amend rules that govern the Commission’s whistleblower program.  It has been seven years since these rules were adopted. The Commission is seeking public comment and data on a broad range of issues relating to the whistleblower program, and will then consider further action on the proposal, which includes provisions:
• Allowing awards based on deferred prosecution agreements and non-prosecution agreements entered into by the DOJ or a state AG in a criminal case, or a settlement agreement entered into by the Commission.
• Providing the Commission with flexibility to increase awards on smaller actions, while decreasing larger awards.  In the Wall Street Journal, Stephen Kohn, executive director of the National Whistleblower Center, criticized the proposal, saying that scaling back payouts is tantamount to “killing the goose that lays the golden egg.”  The Commission would have discretion to increase awards that could yield a payout of less than $2 million , and establish awards for enforcement actions that do not currently qualify as covered actions because they do not meet the more than $1 million threshold requirement.  Meanwhile, the Commission would have discretion to reduce larger awards, though in no event would awards be adjusted below $30 million, and awards would still be subject to the 10% statutory minimum. The SEC’s related Fact Sheet notes that 40% of funds paid out by the Commission to whistleblowers have been paid out in only three awards.
• Eliminating potential double recoveries under the current definition of “related action.”
• Modifying Rule 21F-2 to comport with the Supreme Court’s holding in Digital Realty Trust, Inc. v. Somers, where the Court held that whistleblower provisions of the Exchange Act require that a person report a possible securities law violation to the Commission in order to qualify for protection against employment retaliation under that Rule.
• Increasing the efficiency of the claims review process.
• Clarifying and enhancing certain policies and procedures and issuing interpretive guidance to help clarify the meaning of “independent analysis” as that term is defined in Exchange Act Rule 21F-4 and utilized in award applications.

An archived webcast of the meeting will be available on sec.gov