On November 3, 2010, the U.S. Securities and Exchange Commission (the SEC

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1 November 23, 2010 SEC Releases Proposed Rules for Implementing Dodd-Frank Whistleblower Provisions If you have any questions regarding the matters discussed in this memorandum, please contact the following attorneys or call your regular Skadden contact. Washington, D.C. Erich T. Schwartz Colleen P. Mahoney Charles F. Walker Marc S. Gerber Boston James R. Carroll Chicago Charles F. Smith * * * This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws. Introduction On November 3, 2010, the U.S. Securities and Exchange Commission (the SEC or the Commission) released proposed rules to implement Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which was enacted on July 21, The proposed rules set out a comprehensive procedure through which potential whistleblowers may submit information to the SEC and apply for award payments. 2 The proposing release discusses various objectives of Section 21F and the proposed rules, the most important of which is to encourage whistleblowers to come forward with high-quality information about potential violations of U.S. securities laws. The proposing release also solicits comments on many aspects of the proposed rules. The proposed rules attempt to address some of the operational challenges and perverse incentives inherent in a program that offers substantial government payments for internal compliance information. It does so with limited success. In their current form, the proposed rules raise numerous concerns for corporations, including the effect of the proposed rules on maintaining effective corporate compliance programs. Part one of this memorandum summarizes the SEC s proposed rules implementing the whistleblower provision of Dodd-Frank. In part two of the memorandum we identify concerns that the proposed rules do not fully address. Description of Proposed Rules The proposed rules contain detailed information, written in an accessible, plain English style, about the requirements and procedures with which whistleblowers must comply in order to receive monetary awards. The proposing release explains that the SEC intends to provide a complete, self-contained set of rules regarding the whistleblower program. The proposed rules begin by establishing the requirements that a whistleblower must meet in terms of the type and timing of the information provided to the SEC. A whistleblower may be eligible for an award where he or she voluntarily provides original information to the SEC that leads to the successful enforcement of a federal court or administrative action in which the SEC obtains monetary sanctions totaling more than $1 million. 3 The proposed rules specify that, for purposes of calculating whether a Commission action exceeds $1 million, the term action means a single captioned judicial or administrative proceeding. 4 This clarifies a potential ambiguity in the statute, and means that the Commission will not aggregate sanctions that are imposed in separate judicial or administrative 1 Section 922 of Dodd-Frank is codified as new Section 21F of the Securities Exchange Act of 1934 (the Exchange Act). Four Times Square, New York, NY Telephone: See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Exchange Act Release No. 63,237 (Nov. 3, 2010) (Proposing Release). Dodd- Frank provided the Commodity Futures Trading Commission (the CFTC) with parallel authority to pay whistleblower awards. The CFTC has proposed its own set of implanting regulations. See Proposed Rules for Implementing the Whistleblower Provisions of the Commodity Exchange Act, RIN Number 3038-AD04 (Nov. 10, 2010). 3 Proposed Rule 17 C.F.R F-3(a). As described in this memorandum, certain disqualifications may preclude a whistleblower award. 4 Proposed Rule 17 C.F.R F-4(d).

2 2 actions for the purpose of determining that the statutory minimum threshold has been reached. 5 Additionally, when determining whether the $1 million threshold has been reached, the SEC will not consider sanctions that the whistleblower is ordered to pay, or that are ordered against an entity whose liability is based substantially on conduct the whistleblower directed, planned, or initiated. 6 If a whistleblower s original information leads to a successful action in which the Commission obtains monetary sanctions exceeding $1 million, the whistleblower will also be eligible for recoveries in related actions that are based on the same original information and are brought by the U.S. Attorney General, the SEC, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, a national securities exchange, a registered securities association, a registered clearing agency, the Municipal Securities Rulemaking Board or a state attorney general in a criminal case. 7 The percentage awarded in a Commission action may differ from the percentage awarded in a related action, because the timing of award determinations and the value of a whistleblower s contribution may differ in each action. 8 The proposed rules provide that whistleblowers will not receive amnesty. Providing information to the SEC and assisting in an investigation and enforcement action will not preclude the SEC from bringing an action against a whistleblower based on their own conduct. In appropriate cases, however, the SEC will take the individual s cooperation into account pursuant to its Policy Statement Concerning Cooperation by Individuals in Investigations and Related Enforcement Actions. 9 The proposed rules include several detailed definitions that expand on the foregoing standards, including: Whistleblower: An individual who provides the SEC with information relating to a potential violation of the securities laws. Companies and other entities are not eligible to be whistleblowers. 10 Whistleblowers may submit information to the SEC anonymously. A whistleblower proceeding anonymously is required to be represented by an attorney, whose name and contact information will be submitted to the SEC, and anonymous whistleblowers will ultimately need to verify their identity to the SEC in order to claim an award. 11 Several categories of persons are not eligible for awards, including persons (i) convicted of a criminal violation related to the SEC action or a related action, (ii) who obtained the information through the performance of an audit that is subject to the requirements of Section 10A of the Exchange Act and (iii) who make false statements in their whistleblower submission Proposing Release at Proposed Rule 17 C.F.R F Proposed Rule 17 C.F.R F-3(b). 8 Proposed Rule 17 C.F.R F-5(b); Proposing Release at Proposed Rule 17 C.F.R F Proposed Rule 17 C.F.R F-2(a). 11 Proposed Rule 17 C.F.R F-7(b). 12 Proposed Rule 17 C.F.R F-8(c). Section 10A of the Exchange Act requires that a registered public accounting firm engaged in an audit of the financial statements of an issuer take certain steps if it becomes aware of information indicating an illegal act, which may in certain circumstances include reporting directly to the Commission. See 15 U.S.C. 78j-1. The Commission has interpreted the exclusion from eligibility as a whistleblower in Section 21F(c)(2)(C) of the Exchange Act to include all persons who obtain information through the performance of a required audit, regardless whether the auditor makes a report to the Commission. Proposing Release at 58 n.68. In addition to this statutory

3 3 Voluntarily: To receive an award, a whistleblower must provide the SEC with information before he or she, or his or her representative, receives any request, inquiry, or demand from the SEC, other governmental authorities, self-regulatory organizations, or the Public Company Accounting Oversight Board (PCAOB). 13 The inclusion of a whistleblower s documents or information within the scope of a request received by a whistleblower s employer is also a prohibition, unless the employer fails to provide the documents or information to the requesting authority in a timely manner. 14 Submissions will not be considered voluntary if the whistleblower is subject to a pre-existing legal or contractual duty to report the securities violations to the SEC, other governmental authorities, self-regulatory organizations, or the PCAOB. 15 Original information: To receive an award, a whistleblower submission must be (i) derived from independent knowledge or independent analysis, (ii) not already known to the SEC from any other source (unless the whistleblower is the original source) and (iii) not exclusively derived from certain public sources (unless the whistleblower is a source of the information). 16 Independent knowledge means factual information that is not derived from publicly available sources. 17 The proposing release clarifies that a person need not have direct, first-hand knowledge of potential violations to be considered to have independent knowledge. 18 Independent analysis means a person s own analysis, which is defined as the examination and evaluation of information that may be generally available, but which reveals information not generally known or available to the public. 19 As a means to limit issues with tainted information, certain information is specifically excluded from the definition of original information, including that which is obtained (i) subject to the attorney-client privilege; (ii) as a result of a legal representation; (iii) through an engagement required under the securities laws by an independent public accountant; (iv) because of the person s legal, compliance, audit, supervisory or governance responsibilities to an entity and the information was communicated to the person with the expectation they would take reasonable steps to cause the entity to respond appropriately, unless the entity did not disclose the information to the SEC in a reasonable time or proceeded in bad faith; (v) otherwise because of a company s legal, compliance, audit or other similar processes; or (vi) in a way that violates federal or state criminal law. 20 Information that leads to successful enforcement: A whistleblower will be credited with providing information that led to a successful enforcement if (i) the information caused the SEC to commence an examination, open an investigation, reopen a closed investigation or inquire about new or different conduct, and the exclusion, as discussed below, the Commission s proposed rules include a broader exclusion for information obtained through the performance of a required audit from the definition of original information. 13 Proposed Rule 17 C.F.R F-4(a). 14 Id. 15 Id. 16 Proposed Rule 17 C.F.R F-4(b)(1). 17 Proposed Rule 17 C.F.R F-4(b)(2). 18 Proposing Release at Proposed Rule 17 C.F.R F-4(b)(3). 20 Proposed Rule 17 C.F.R F-4(b)(4).

4 4 information significantly contributed to the action s success, or (ii) the information was about conduct that was already under investigation, and it would not otherwise would have been obtained and was essential to the success of the action. 21 The proposed rules restate Section 21F s provision that if the SEC determines that an award is merited, the award must be at least 10 percent and no more than 30 percent of the monetary sanctions collected by the SEC and certain other authorities. 22 It is possible that more than one whistleblower may receive an award in connection with the same or related actions. In that case, each whistleblower will be given an individual percentage award, but the total amount given to all whistleblowers as a group will still be between 10 percent and 30 percent. 23 The proposed rules delineate the steps a whistleblower must take to comply with the award process, consisting of filing a series of forms to submit information and apply for a claim, including making certain statements under penalty of perjury, and providing additional information or entering into a confidentiality agreement as required by the SEC. 24 SEC determinations of whether or to whom to make an award may be appealed to U.S. Courts of Appeals. 25 Determinations regarding the amount of an award, as long as it meets the statutory mandate of between 10 percent and 30 percent, are not appealable. 26 The proposed rules set out criteria that the SEC will consider when determining the amount of an award. These include: the significance of the information provided to the success of the SEC action; the degree of assistance provided by the whistleblower; the SEC s programmatic interest in deterring securities laws violations; and whether the award otherwise enhances the SEC s ability to enforce federal securities laws. 27 The proposing release also states that the SEC will use its discretion in setting whistleblower award amounts to encourage the utilization of internal corporate compliance procedures. Specifically, the proposing release states that the SEC expects to give credit to whistleblowers who first report potential violations internally, rather than reporting directly to the SEC in the first instance. 28 Nevertheless, internal reporting is not a requirement in order to receive a whistleblower award above the 10 percent statutory minimum, and whistleblowers will not be penalized for not availing themselves of internal reporting opportunities for fear of retaliation or for other legitimate reasons. 29 In addition to the award criteria listed above, the proposed rules include other provisions intended to support corporate compliance programs by allowing a whistleblower to preserve his or her position vis a vis the SEC while giving them time to report potential violations through internal company procedures. If a whistleblower provides information to a person with legal, compliance, audit, 21 Proposed Rule 17 C.F.R F-4(c). 22 Proposed Rule 17 C.F.R F-5(a). 23 Proposed Rule 17 C.F.R F-5(b). 24 Proposed Rules 17 C.F.R F-8 to Proposed Rule 17 C.F.R F Id. 27 Proposed Rule 17 C.F.R F Proposing Release at 35 n.40 & Id.

5 5 supervisory or governance responsibilities for an entity, or to an entity s legal, compliance, audit or other similar functions for identifying and addressing potential non-compliance, and then submits the same information to the SEC within 90 days, the SEC will consider that they provided information as of the date of the original disclosure to the company. 30 Section 21F of the Exchange Act establishes retaliation protections for whistleblowers. The proposed rules state that these protections apply regardless of whether a whistleblower qualifies for an award. 31 In addition, under the proposed rules, no person may impede a whistleblower from communicating with the SEC staff about a potential securities law violation. 32 This includes enforcing or threatening to enforce a confidentiality agreement. 33 Thus, under the proposed rules, alleged retaliation could expose a corporation to the risk of an SEC enforcement action, in addition to the usual risk that an employee will assert private claims. The proposed rules do not otherwise interpret or implement the whistleblower anti-retaliation provisions. In its proposing release, the SEC solicits comments on whether it should promulgate such rules. Specifically, the SEC asks (i) whether anti-retaliation protections should apply broadly to any person who provides information to the Commission concerning a potential violation of the securities laws, or whether they should be limited by the procedural or substantive prerequisites for receipt of a whistleblower award; (ii) whether frivolous or bad faith whistleblower claims should be excluded from the protections afforded by the anti-retaliation provisions; and (iii) whether the Commission should promulgate rules to ensure that the anti-retaliation provisions are not used to protect employees from otherwise appropriate employment actions. 34 The proposed rules do not explain whether or how the anti-retaliation provisions will be enforced by the SEC. Pursuant to the proposed rules, if a whistleblower is a director, officer, member, agent or employee of an entity represented by legal counsel and the individual has initiated communication with the SEC about a potential violation, the SEC staff may communicate directly with that person about the subject of the communication. The proposed rules assert that the staff need not seek the consent of the entity s counsel for such communication. 35 Considerations for Issuers and Other Securities Market Participants Dodd-Frank s enactment raised concerns about the impact the new law s whistleblower provisions could have on issuers and other participants in the securities markets. These issues included the whistleblower program s potentially deleterious effect on corporate compliance programs and the perverse incentives it may offer for individuals to circumvent such programs, or to approach the SEC with false, incomplete, or otherwise faulty information in an attempt to obtain an award. Although the proposed rules attempt to address some of these concerns, in some instances they create new concerns. Issuers, financial services companies and other entities should consider the ways the proposed rules could affect their operations, and participate in the comment process as appropriate to address such issues. 30 Proposed Rule 17 C.F.R F-4(b)(7). 31 Proposed Rule 17 C.F.R F-2(b). 32 Proposed Rule 17 C.F.R F-16(a). 33 Id. 34 Proposing Release at Proposed Rule 17 C.F.R F-16(b).

6 6 Concern: Will the Whistleblower Program Undermine Internal Corporate Compliance Programs? A significant area of concern for issuers and other securities market participants is the possibility that the proposed rules could cause whistleblowers to ignore internal compliance programs in favor of bringing their concerns directly to the SEC because of the tremendous potential monetary awards provided by Section 21F. Many companies established sophisticated internal corporate compliance programs in response to the Sarbanes-Oxley Act of 2002, which required public companies to establish procedures for the confidential receipt and treatment of complaints regarding accounting, internal controls, and auditing matters. 36 Of course, regulated financial services firms are required to have extensive internal compliance programs. 37 The Commission recognizes the importance of these programs. 38 However, the proposed rules do little to mitigate the threat to the effective operation of these programs inherent in the whistleblower award program. As discussed, the proposed rules provide certain incentives intended to support internal compliance programs, such as allowing whistleblowers to keep their place in line vis a vis the SEC if they first report concerns to a company compliance program, and crediting whistleblowers with reporting to internal programs when calculating award amounts. Further, in the proposing release, the SEC makes several statements expressing its disinclination to undermine effective compliance processes, and it expressly requests comments on how best to achieve this goal. Nonetheless, the proposed rules do not address potential problems in this context. For example, persons who are aware of potential misconduct might choose not to address it at a nascent stage, instead waiting to see if it grows into a more serious problem to potentially merit significant sanctions and a correspondingly large whistleblower award. Although the SEC has indicated that it will take this type of undesirable conduct into account when setting the amount of a whistleblower award, 39 it is not disabling, and the promise of at least 10 percent of monetary sanctions collected by the SEC and other authorities may in some instances unfortunately be enough to induce a whistleblower to let a problem worsen before reporting it. In addition, the SEC s attempts to support compliance programs through the new rules raise questions. For example, the proposed rules give whistleblowers ninety days to report to the SEC after raising issues to a company compliance program. It is not clear what should happen if the company appropriately addresses the potential whistleblower s concerns within the ninety-day period. May 36 Sarbanes-Oxley Act of 2002, Pub. L. No , 301, 116 Stat. 745, 776 (2002). 37 See, e.g., Section 203(e)(6) of the Investment Advisers Act of 1940, 15 U.S.C. 80b-3(e)(6) (requiring registered investment advisers to supervise the activities of persons who act on their behalf by establishing procedures that are reasonably designed to prevent and detect violations of the federal securities and commodities laws, rules and regulations thereunder, and Municipal Securities Rulemaking Board (MSRB) rules); Advisers Act Rule 206(4)-7, 17 C.F.R (4)-7 (prohibiting the provision of investment advice by advisers that are required to be registered with the SEC, unless advisers adopt compliance policies and procedures, review them annually, and designate a chief compliance officer); National Association of Securities Dealers Rule 3012 (requiring broker-dealers to maintain systems of supervisory control and procedures for testing and verifying those systems); Financial Industry Regulatory Authority (FINRA) Rule 3130 (requiring broker-dealers to designate chief compliance officers responsible for, inter alia, certifying processes for the establishment, maintenance, review, testing, and modification of written compliance policies and written supervisory procedures that are reasonably designed to achieve compliance with applicable FINRA rules, MSRB rules and federal securities laws and regulations). 38 See Proposing Release at ( Corporate compliance programs play a role in preventing and detecting securities violations that could harm investors. If these programs are not utilized or working, our system of securities regulation will be less effective. Accordingly, the Commission believes that encouraging whistleblowers to report securities violations to their corporate compliance program is consistent with the Commission s investor protection mission. ). 39 Proposing Release at

7 7 the whistleblower still report the conduct to the SEC? Should the company self-report all compliance issues to the SEC, no matter how unimportant, in order to forestall whistleblower reports? Should companies make regular, periodic self-reports to the SEC for the same purpose? There are several ways in which the proposed rules could more effectively ensure that internal compliance programs continue to play an integral role in responding to potential misconduct and to deter premature or unfounded whistleblower reports. The proposed rules could require whistleblowers to report concerns to internal compliance programs before approaching the SEC, or require them to wait ninety days (or longer) before reporting to the SEC after invoking the internal compliance process. The rules could also impose negative consequences on individuals in addition to the already proposed positive incentives for not reporting concerns in the first instance to internal compliance programs, either by disqualifying such individuals from being considered whistleblowers, or at least by penalizing such persons, for example by mandating that they will be eligible to receive only the minimum award of 10 percent. Finally, as a requirement for making a whistleblower submission, the SEC could require that a whistleblower certify or provide evidence to the SEC showing that a company failed to respond appropriately to a concern. Concern: Will the Whistleblower Program Undermine Essential Relationships of Trust? Another concern raised by the proposed rules is the incentive to whistleblowing for individuals who are in positions of trust or otherwise are privy to company information, and the uncertainty this would create for companies. Under the proposed rules, attorneys, independent auditors, and personnel with compliance responsibilities face certain obstacles to reporting information to the SEC. These provisions provide some ability for companies to continue to rely on key advisors and processes while ameliorating the concern that those advisors will use sensitive information for their personal gain. The proposed rules raise important issues in this area as well, however. For example, the proposed rules would purport to allow the SEC to communicate directly with employees and other personnel of entities represented by legal counsel, in contravention of established law requiring SEC staff to communicate with represented persons through or with the consent of their attorneys. If an officer or director chose not to inform his employer that he had made a whistleblower submission to the SEC, a company might not know that a member of the inner circle was sharing confidential information with the SEC for the sake of his own personal gain. This radical new approach could undermine companies confidence in the protections normally afforded by legal representation and force entities to reconsider the manner in which they share information with their own fiduciaries. Additionally, the proposed rules fail to address potential Fourth Amendment issues that may arise if a whistleblower employee provides information about his or her employer to the SEC. The Internal Revenue Service, which has implemented a similar whistleblower program, has issued guidance to its staff to minimize the likelihood that multiple contacts between the government and a whistleblower employee will result in an illegal search or seizure. 40 The proposed rules contain no such limitation. Concern: The Risk of Unfounded Tips Issuers and other market participants should also be aware that the large financial motivations provided under Section 21F could motivate individuals to make whistleblower submissions that are false or otherwise incorrect. In turn, these allegations could lead to expensive and distracting investigations, not to mention the possibility of unfounded and unfair enforcement actions by the SEC. 40 See I.R.S. Chief Couns. Notice CC (Feb. 17, 2010); I.R.S. Chief Couns. Notice CC (Feb. 27, 2008).

8 8 The proposed rules address this concern in part by requiring whistleblowers to make declarations under oath, subject to the penalties of perjury, about the truthfulness of their statements. 41 At least one Justice Department official has stated that whistleblowers who provide false information to the SEC will face criminal prosecution. 42 In addition, persons who make false statements or use false documents in their dealings with the SEC are not eligible to be considered for a whistleblower award. 43 These requirements, however, may not be robust enough to deter whistleblowers who are attracted by the possibility of multimillion dollar awards. The rules could more effectively deter false accusations by formally permitting affected parties the opportunity to respond to false or unfounded whistleblower allegations. Other Issues Presented by the SEC s New Whistleblower Program The SEC s primary goal in promulgating the proposed rules is to maximize submission of highquality whistleblower information. As a result, it is possible that the SEC could gain more tips that lead it to open more investigations with greater underlying evidence than it has previously possessed, resulting in a more aggressive securities enforcement environment for companies. In that circumstance, companies would be prudent to ensure that their compliance systems are robust, so they can deter, detect, and adequately address misconduct before it gives rise to a whistleblower complaint to the SEC. See Skadden Client Alert: Dodd-Frank Act Tempts Securities and Commodities Law Whistleblowers with Lucrative Cash Bounties, Highlighting the Need for Effective Compliance Procedures (Oct. 20, 2010) (discussing steps that companies should take to review internal compliance programs and response protocols). Once a company is subject to an SEC investigation, under the proposed rules, employees who are within the scope of a subpoena or request for information that is directed to a company will not at that point be deemed to have voluntarily submitted information and thus will not be eligible for a whistleblower award unless the company is not timely in its response to the subpoena or request for information. 44 This limitation demonstrates the importance of timely cooperation with SEC investigations and compliance with document requests and subpoenas, lest companies create new opportunities for whistleblower claims that would have otherwise been foreclosed. Additionally, companies should note that, subject to certain exceptions, information that is obtained through attorney-client privileged communications is not original, and thus cannot be the basis of a whistleblower award. 45 This limitation highlights the importance of maintaining privilege over communications with counsel, particularly in the context of internal investigations. Companies also should consider the impact that the new whistleblower program will have on their ability to cooperate with government enforcement investigations. The proposing release states that, in appropriate cases, the SEC will reach out to companies against whom whistleblower complaints have been submitted to give the company an opportunity to investigate the matter and report back. 46 The company s actions in these circumstances will be considered in accordance with the 41 Proposed Rule 17 C.F.R F-9(b). 42 See Dena Aubin, Prosecutor Warns of Whistleblowers Run Amok, Reuters, Nov. 12, 2010 (reporting comments by Preet Bharara, U.S. Attorney for the Southern District of New York, at a Practising Law Institute conference). 43 Proposed Rule 17 C.F.R F-8(c)(7). 44 Proposed Rule 17 C.F.R F-4(a)(1); Proposing Release at Proposed Rule 17 C.F.R F-4(b)(4)(i). 46 Proposing Release at

9 9 Commission s previous statement of policy for evaluating cooperation by companies. 47 This guidance appears intended to address criticism that the whistleblower program will make it virtually impossible for companies to be first in the door to report potential misconduct to the government, undermining companies ability to receive cooperation credit. Nevertheless, important questions remain. What are the appropriate cases in which the SEC will give companies an opportunity to conduct an investigation and report back? Undoubtedly, not all companies that are subject to whistleblower allegations will receive an opportunity to self-investigate and receive cooperation credit. Moreover, even if companies are able to receive credit for cooperating with the SEC, the whistleblower program could still inhibit their ability to receive full credit for cooperation in any related enforcement action by the Department of Justice. This is because federal sentencing guidelines offer full credit only if companies self-report prior to the imminent threat of disclosure or government investigation. 48 Finally, in addition to the foregoing concerns, companies should be aware that parties to civil litigation may attempt to use the SEC s new whistleblower program as a vehicle for collateral attack. The SEC s proposing release anticipates that violations of the securities laws may come to light through document discovery from a litigation opponent, and states that parties in receipt of such discovery can submit a whistleblower claim. 49 Clearly, this presents the risk of additional fronts for battle in any litigation, and underscores that companies and their counsel will need to be cognizant to potential securities law violations even in the context of litigation that does not relate to securities issues. Implementation of the Whistleblower Program Although the final rules under Section 922 of Dodd-Frank are not required to be implemented until April 21, 2011, the SEC has stated that it expects to finalize the proposed rules between January and March of Comments on the proposed rules can be submitted until December 17, The SEC s Division of Enforcement is currently in the process of establishing a Whistleblower Office, and has posted a vacancy announcement for a senior officer to head that office. 50 Additionally, the SEC has set aside more than $450 million in an Investor Protection Fund to provide funding for future whistleblower awards. 51 Dodd-Frank provides that securities law whistleblowers can receive credit for tips provided after July 21, 2010, the date Dodd-Frank was enacted, even though implementing regulations have not yet been promulgated, and even with respect to violations that occurred prior to July 21, To date, SEC representatives report that the SEC had already received some very high-quality tips from whistleblowers. 52 It can be anticipated that the flood of new tips will continue as the SEC moves forward with implementing its new whistleblower program. 47 Id. at 35 (citing Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, Exchange Act Release No. 44,969 (Oct. 23, 2001) (the Seaboard Report )). 48 U.S. Sentencing Guidelines Manual 8C2.5(g) (2010). 49 See Proposing Release at U.S. Securities and Exchange Commission, Annual Report on Whistleblower Program 4 (2010). 51 Id. at Jessica Holzer and Fawn Johnson, New SEC Awards For Informants Already Yielding Tips, Wall. St. J., Sept, 3, 2010.