80 FR 47829 - Interpretation of the SEC's Whistleblower Rules Under Section 21F of the Securities Exchange Act of 1934

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 153 (August 10, 2015)

Page Range		47829-47831
FR Document		2015-19508
The Securities and Exchange Commission (Commission or SEC) is issuing this interpretive rule to clarify that, for purposes of the employment retaliation protections provided by Section 21F of the Securities Exchange Act of 1934 (``Exchange Act''), an individual's status as a whistleblower does not depend on adherence to the reporting procedures specified in Exchange Act Rule 21F-9(a), but is determined solely by the terms of Exchange Act Rule 21F-2(b)(1).
Federal Register, Volume 80 Issue 153 (Monday, August 10, 2015)
[Federal Register Volume 80, Number 153 (Monday, August 10, 2015)]
[Rules and Regulations]
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From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-19508]



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under 50 titles pursuant to 44 U.S.C. 1510.

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Federal Register / Vol. 80, No. 153 / Monday, August 10, 2015 / Rules 
and Regulations

[[Page 47829]]



SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 241

[Release No. 34-75592]


Interpretation of the SEC's Whistleblower Rules Under Section 21F 
of the Securities Exchange Act of 1934

AGENCY: Securities and Exchange Commission.

ACTION: Interpretation.

-----------------------------------------------------------------------

SUMMARY: The Securities and Exchange Commission (Commission or SEC) is 
issuing this interpretive rule to clarify that, for purposes of the 
employment retaliation protections provided by Section 21F of the 
Securities Exchange Act of 1934 (``Exchange Act''), an individual's 
status as a whistleblower does not depend on adherence to the reporting 
procedures specified in Exchange Act Rule 21F-9(a), but is determined 
solely by the terms of Exchange Act Rule 21F-2(b)(1).

DATES: Effective August 10, 2015.

FOR FURTHER INFORMATION CONTACT: Jane Norberg, Deputy Chief of the 
Office of the Whistleblower, Division of Enforcement, at (202) 551-
4790; Brian A. Ochs, Senior Special Counsel, Office of the General 
Counsel, at (202) 551-5067; Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: 

I. Background

    In Section 922 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 12 4 Stat. 1376, 1841-49 (2010), 
Congress amended the Exchange Act to add Section 21F, 15 U.S.C. 78u-
6(h)(1), entitled ``Securities Whistleblower Incentives and 
Protection.'' Section 21F established a series of new incentives and 
protections for individuals to report possible violations of the 
federal securities laws. Generally speaking, these incentives and 
protections take three forms--monetary awards for providing 
information, heightened confidentiality assurances, and enhanced 
employment retaliation protections.
    In May 2011, the Commission issued legislative rules 
(``whistleblower rules'') after notice-and-comment rulemaking to 
implement the provisions of Section 21F. The Commission is now issuing 
this interpretive rule to clarify the meaning and application of 
certain of those rules. As explained below, an individual may qualify 
as a whistleblower for purposes of Section 21F's employment retaliation 
protections irrespective of whether he or she has adhered to the 
reporting procedures specified in Rule 21F-9(a). Rule 21F-2(b)(1) alone 
governs the procedures that an individual must follow to qualify as a 
whistleblower eligible for Section 21F's employment retaliation 
protections.

II. Interpretation

    When we promulgated our legislative rules to implement the 
whistleblower program, we recognized that Section 21F is ambiguous on 
the issue of the scope of the employment retaliation protections 
afforded thereunder. On the one hand, Section 21F(h)(1)(A) includes a 
broad catchall provision that prohibits an employer from, among other 
things, retaliating against a whistleblower for ``making disclosures 
that are required or protected under'' the Sarbanes-Oxley Act of 2002, 
the Exchange Act, 18 U.S.C. 1513(e), ``and any other law, rule, or 
regulation subject to the jurisdiction of the Commission.'' \1\ As the 
Commission explained in the adopting release that accompanied the 
whistleblower rules, the reporting covered by this provision includes 
``report[s] to persons or governmental authorities other than the 
Commission.'' \2\ But on the other hand, the employment retaliation 
protections afforded to whistleblowers under Section 21F could be read 
as limited to only those individuals who provide the Commission with 
information; this is because under Section 21F(a)(6) the ``term 
`whistleblower' means any individual who provides . . . information 
relating to a violation of the securities laws to the Commission, in a 
manner established, by rule or regulation, by the Commission.'' 
(Emphasis added).
---------------------------------------------------------------------------

    \1\ Section 21F(h)(1)(A) provides as follows: ``(A) In General. 
No employer may discharge, demote, suspend, threaten, harass, 
directly or indirectly, or in any other manner discriminate against, 
a whistleblower in the terms and conditions of employment because of 
any lawful act done by the whistleblower--(i) in providing 
information to the Commission in accordance with this section; (ii) 
in initiating, testifying in, or assisting in any investigation or 
judicial or administrative action of the Commission based upon or 
related to such information; or (iii) in making disclosures that are 
required or protected under the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7201 et seq.), this chapter [i.e., the Exchange Act], 
including section 78j-1(m) of this title [i.e., Section 10A(m) of 
the Exchange Act], section 1513(e) of Title 18, and any other law, 
rule, or regulation subject to the jurisdiction of the Commission.''
     Clause (iii), which is a catchall provision, provides 
employment retaliation protection for certain internal reporting at 
public companies and for certain disclosures to the U.S. Department 
of Justice by expressly incorporating the ``disclosures that are 
required or protected under the Sarbanes-Oxley Act,'' which includes 
Sarbanes-Oxley Section 806. Section 806, in turn, prohibits 
employment retaliation against an employee of a public company (or a 
subsidiary thereof) based on certain disclosures of securities law 
violations to ``a person with supervisory authority over the 
employee (or such other person working for the employer who has the 
authority to investigate, discovery, or terminate misconduct)'' or 
to a ``Federal regulatory or law enforcement agency.'' 15 U.S.C. 
1514A(1).
    \2\ Securities Whistleblower Incentives and Protections, 76 FR 
34300, 34304 (June 13, 2011) (emphasis in original).
---------------------------------------------------------------------------

    To resolve this ambiguity, the Commission in Rule 21F-2 promulgated 
two separate definitions of ``whistleblower.'' These two definitions 
apply in different circumstances and each involves its own specified 
reporting procedures that must be satisfied in order for an individual 
to qualify under the particular definition. The first definition, which 
is set forth in Rule 21F-2(a), mirrors the statutory definition of 
whistleblower. It provides in pertinent part that an individual is ``a 
whistleblower if, alone or jointly with others, [the individual] 
provide[s] the Commission with information pursuant to the procedures 
set forth in [Rule] 21F-9(a).'' This definition of whistleblower 
applies only to the award and confidentiality provisions of Section 
21F.
    The second whistleblower definition, which is set forth in Rule 
21F-2(b)(1), provides in pertinent part that, ``[f]or purposes of the 
anti-retaliation protections afforded by Section 21F(h)(1) of the 
Exchange Act . . . , [an

[[Page 47830]]

individual is] a whistleblower if . . . [the individual] provide[d] 
that information in a manner described in Section 21F(h)(1)(A) of the 
Exchange Act[.]'' Rule 21F-2(b)(1)(ii). This definition--unlike the 
whistleblower definition in Rule 21F-2(a) that applies to the award and 
confidentiality provisions--does not require reporting in accordance 
with Rule 21F-9(a)'s procedures.
    We also adopted Rule 21F-9(a) to specify the reporting procedures 
that must be followed by an individual who seeks to qualify as a 
whistleblower under Rule 21F-2(a) and thus to be eligible for an award 
and the heightened confidentiality protections. Rule 21F-9(a) provides 
in pertinent part that, ``[t]o be considered a whistleblower under 
Section 21F . . . , [an individual] must submit [his or her] 
information . . . by either of these methods: (1) Online, through the 
Commission's Web site . . . ; or (2) By mailing or faxing a Form TCR . 
. . to the SEC Office of the Whistleblower . . . .''
    Since our adoption of the whistleblower rules, we have consistently 
understood Rule 21F-9(a) as a procedural rule that applies only to help 
determine an individual's status as a whistleblower for purposes of 
Section 21F's award and confidentiality provisions.\3\ Similarly, it 
has been our consistent view that Rule 21F-2(b)(1) alone controls the 
reporting methods that will qualify an individual as a whistleblower 
for the retaliation protections.
---------------------------------------------------------------------------

    \3\ See generally SEC Staff Report, 2014 Annual Report to 
Congress on the Dodd-Frank Whistleblower Program, 19 (available at: 
http://www.sec.gov/about/offices/owb/annual-report-2014.pdf) 
(explaining that from the time it promulgated the whistleblower 
rules, the Commission has taken the view that the employment 
retaliation protections ``apply not just to individuals who report 
to the SEC but also to individuals when they, among other things, 
report potential securities law violations internally at public 
companies''; also explaining that the Commission has 
``consistently'' opposed the contrary interpretation).
---------------------------------------------------------------------------

    Notwithstanding our view that Rule 21F-2(b)(1) alone controls in 
the context of determining the relevant reporting procedures for an 
individual to qualify as a whistleblower eligible for Section 21F's 
employment retaliation protections, the Court of Appeals for the Fifth 
Circuit expressed some uncertainty about this reading in a recent 
decision.\4\ Although we appreciate that if read in isolation Rule 21F-
9(a) could be construed to require that an individual must report to 
the Commission before he or she will qualify as a whistleblower 
eligible for the employment retaliation protections provided by Section 
21F, that construction is not consistent with Rule 21F-2 and would 
undermine our overall goals in implementing the whistleblower program. 
We reach this conclusion for several reasons.
---------------------------------------------------------------------------

    \4\ Asadi v. G.E. Energy (U.S.A.), L.L.C., 720 F.3d 620, 630 
(5th Cir. 2013).
---------------------------------------------------------------------------

    First, as the text of Rule 21F-2(b)(1) states, ``for purposes of 
Section 21F's employment retaliation protections,'' an individual 
qualifies as a whistleblower entitled to the employment retaliation 
protection whenever he or she makes any of the broader array of 
disclosures specified in Section 21F(h)(1)(A).\5\ The fact that Rule 
21F-2(b)(1) expressly and specifically applies in the employment 
retaliation context demonstrates that it should control over Rule 21F-
9(a).\6\
---------------------------------------------------------------------------

    \5\ In contrast, Rule 21F-2(a)(2) states that ``[t]o be eligible 
for an award,'' an individual must submit original information ``to 
the Commission in accordance with the procedures and conditions 
described in Rules 21F-4, 21F-8, and 21F-9.'' (Emphasis added). In 
addition, Rule 21F-2(a)(1) specifically cross-references the 
procedures set forth in Rule 21F-9(a), whereas Rule 21F-2(b)(1) does 
not contain a similar cross-reference.
    \6\ See, e.g., In re Gulevsky, 362 F.3d 961, 963 (7th Cir. 2004) 
(``[W]hen both a specific and a general provision govern a 
situation, the specific one controls.'') (quoting Morales v. Trans 
World Airlines, Inc., 504 U.S. 374, 384-85, 112 S.Ct. 2031, 119 
L.Ed.2d 157 (1992)).
---------------------------------------------------------------------------

    Second, Rule 21F-2(b)(1)(iii) expressly provides that ``[t]he anti-
retaliation protections apply whether or not [an individual] 
satisf[ies] the requirements, procedures and conditions to qualify for 
an award.'' As Rule 21F-2(a)(2) makes plain, the reporting procedures 
specified in Rule 21F-9(a) are among the procedures that an individual 
must follow to recover an award. The contrast between these provisions 
further supports our interpretation that the availability of employment 
retaliation protection is not conditioned on an individual's adherence 
to the Rule 21F-9(a) procedures.\7\
---------------------------------------------------------------------------

    \7\ We note that, other than Rule 21F-2(b), all of the other 
rules that the Commission adopted to implement the whistleblower 
program deal exclusively with the award and confidentiality 
provisions.
---------------------------------------------------------------------------

    Finally, our interpretation best comports with our overall goals in 
implementing the whistleblower program. Specifically, by providing 
employment retaliation protections for individuals who report 
internally first to a supervisor, compliance official, or other person 
working for the company that has authority to investigate, discover, or 
terminate misconduct, our interpretive rule avoids a two-tiered 
structure of employment retaliation protection that might discourage 
some individuals from first reporting internally in appropriate 
circumstances and, thus, jeopardize the investor-protection and law-
enforcement benefits that can result from internal reporting.\8\ Under 
our interpretation, an individual who reports internally and suffers 
employment retaliation will be no less protected than an individual who 
comes immediately to the Commission. Providing equivalent employment 
retaliation protection for both situations removes a potentially 
serious disincentive to internal reporting by employees in appropriate 
circumstances. A contrary interpretation would undermine the other 
incentives that were put in place through the Commission's 
whistleblower rules in order to encourage internal reporting.\9\
---------------------------------------------------------------------------

    \8\ We note that a contrary interpretation would also create a 
two-tiered scheme of employment retaliation protection even as 
between individuals who report possible securities fraud violations 
or violations of SEC rules or regulations to the Commission; 
specifically, if an individual comes forward to report information 
to the Commission in a manner other than those specified in Rule 
21F-9(a), that individual would not qualify for the employment 
retaliation protections of Section 21F. See Section 21F(h)(1)(A)(i) 
& (ii). But under our reading of Section 21F and the whistleblower 
rules, such individuals would be afforded employment retaliation 
protection under the catchall language of Section 
21F(h)(1)(A)(iii)--which incorporates the protections of Section 806 
of the Sarbanes-Oxley Act--irrespective of the fact that they did 
not comply with the technical reporting requirements of Rule 21F-
9(a).
    \9\ See, e.g., Exchange Act Rule 21F-4(c)(3) (providing that an 
individual who reports internally can collect a whistleblower award 
from the Commission if his internal report to the company or entity 
results in a successful covered action); Exchange Act Rule 21F-
4(b)(7) (providing that an individual who first reports pursuant to 
an entity's internal whistleblower, legal, or compliance procedures 
for reporting allegations of possible violations of law and within 
120 days reports to the Commission will be treated for purposes of 
an award as if the submission to the Commission had been made at the 
earlier internal reporting date); Exchange Act Rule 21F-6(a)(4) 
(providing that when determining the amount of an award, the 
Commission will consider as a plus-factor the whistleblower's 
participation in an entity's internal compliance procedures).
---------------------------------------------------------------------------

    For the foregoing reasons, we are issuing this interpretation to 
clarify that, for purposes of Section 21F's employment retaliation 
protections, an individual's status as a whistleblower does not depend 
on adherence to the reporting procedures specified in Rule 21F-9(a).

List of Subjects in 17 CFR Part 241

    Securities.

Amendments to the Code of Federal Regulations

    For the reasons set out above, the Commission is amending title 17, 
chapter II of the Code of Federal Regulations as set forth below:

[[Page 47831]]

PART 241--INTERPRETATIVE RELEASES RELATING TO THE SECURITIES 
EXCHANGE ACT OF 1934 AND GENERAL RULES AND REGULATIONS THEREUNDER

0
1. Part 241 is amended by adding Release No. 34-75592 to the list of 
interpretive releases to read as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                          Federal Register  Vol.
               Subject                    Release No.                 Date                       and page
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Interpretation of the SEC's                    34-75592  Aug. 4, 2015..................  [Insert FR Volume
 Whistleblower Rules under Section                                                        Number] FR [Insert FR
 21F of the Securities Exchange Act                                                       Page Number].
 of 1934.
----------------------------------------------------------------------------------------------------------------


    By the Commission.

    Dated: August 4, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-19508 Filed 8-7-15; 8:45 am]
 BILLING CODE 8011-01-P
47829

Rules and Regulations Federal Register
Vol. 80, No. 153

Monday, August 10, 2015

This section of the FEDERAL REGISTER and protections for individuals to report explained in the adopting release that
contains regulatory documents having general possible violations of the federal accompanied the whistleblower rules,
applicability and legal effect, most of which securities laws. Generally speaking, the reporting covered by this provision
are keyed to and codified in the Code of these incentives and protections take includes ‘‘report[s] to persons or
Federal Regulations, which is published under three forms—monetary awards for governmental authorities other than the
50 titles pursuant to 44 U.S.C. 1510.
providing information, heightened Commission.’’ 2 But on the other hand,
The Code of Federal Regulations is sold by confidentiality assurances, and the employment retaliation protections
the Superintendent of Documents. Prices of enhanced employment retaliation afforded to whistleblowers under
new books are listed in the first FEDERAL protections. Section 21F could be read as limited to
REGISTER issue of each week. In May 2011, the Commission issued only those individuals who provide the
legislative rules (‘‘whistleblower rules’’) Commission with information; this is
after notice-and-comment rulemaking to because under Section 21F(a)(6) the
SECURITIES AND EXCHANGE implement the provisions of Section ‘‘term ‘whistleblower’ means any
COMMISSION 21F. The Commission is now issuing individual who provides . . .
this interpretive rule to clarify the information relating to a violation of the
17 CFR Part 241 meaning and application of certain of securities laws to the Commission, in a
[Release No. 34–75592] those rules. As explained below, an manner established, by rule or
individual may qualify as a regulation, by the Commission.’’
Interpretation of the SEC’s whistleblower for purposes of Section (Emphasis added).
Whistleblower Rules Under Section 21F’s employment retaliation To resolve this ambiguity, the
21F of the Securities Exchange Act of protections irrespective of whether he or Commission in Rule 21F–2 promulgated
1934 she has adhered to the reporting two separate definitions of
procedures specified in Rule 21F–9(a). ‘‘whistleblower.’’ These two definitions
AGENCY: Securities and Exchange Rule 21F–2(b)(1) alone governs the apply in different circumstances and
Commission. procedures that an individual must each involves its own specified
ACTION: Interpretation. follow to qualify as a whistleblower reporting procedures that must be
eligible for Section 21F’s employment satisfied in order for an individual to
SUMMARY: The Securities and Exchange retaliation protections. qualify under the particular definition.
Commission (Commission or SEC) is The first definition, which is set forth in
issuing this interpretive rule to clarify II. Interpretation Rule 21F–2(a), mirrors the statutory
that, for purposes of the employment When we promulgated our legislative definition of whistleblower. It provides
retaliation protections provided by rules to implement the whistleblower in pertinent part that an individual is ‘‘a
Section 21F of the Securities Exchange program, we recognized that Section whistleblower if, alone or jointly with
Act of 1934 (‘‘Exchange Act’’), an 21F is ambiguous on the issue of the others, [the individual] provide[s] the
individual’s status as a whistleblower scope of the employment retaliation Commission with information pursuant
does not depend on adherence to the protections afforded thereunder. On the to the procedures set forth in [Rule]
reporting procedures specified in one hand, Section 21F(h)(1)(A) includes 21F–9(a).’’ This definition of
Exchange Act Rule 21F–9(a), but is a broad catchall provision that prohibits whistleblower applies only to the award
determined solely by the terms of an employer from, among other things, and confidentiality provisions of
Exchange Act Rule 21F–2(b)(1). retaliating against a whistleblower for Section 21F.
DATES: Effective August 10, 2015. ‘‘making disclosures that are required or The second whistleblower definition,
FOR FURTHER INFORMATION CONTACT: Jane protected under’’ the Sarbanes-Oxley which is set forth in Rule 21F–2(b)(1),
Norberg, Deputy Chief of the Office of Act of 2002, the Exchange Act, 18 U.S.C. provides in pertinent part that, ‘‘[f]or
the Whistleblower, Division of 1513(e), ‘‘and any other law, rule, or purposes of the anti-retaliation
Enforcement, at (202) 551–4790; Brian regulation subject to the jurisdiction of protections afforded by Section
A. Ochs, Senior Special Counsel, Office the Commission.’’ 1 As the Commission 21F(h)(1) of the Exchange Act . . . , [an
of the General Counsel, at (202) 551–
1 Section 21F(h)(1)(A) provides as follows: ‘‘(A) In Clause (iii), which is a catchall provision,
5067; Securities and Exchange provides employment retaliation protection for
General. No employer may discharge, demote,
Commission, 100 F Street NE., suspend, threaten, harass, directly or indirectly, or certain internal reporting at public companies and
Washington, DC 20549. in any other manner discriminate against, a for certain disclosures to the U.S. Department of
whistleblower in the terms and conditions of Justice by expressly incorporating the ‘‘disclosures
SUPPLEMENTARY INFORMATION:
employment because of any lawful act done by the that are required or protected under the Sarbanes-
I. Background whistleblower—(i) in providing information to the Oxley Act,’’ which includes Sarbanes-Oxley Section
Commission in accordance with this section; (ii) in 806. Section 806, in turn, prohibits employment
In Section 922 of the Dodd-Frank initiating, testifying in, or assisting in any retaliation against an employee of a public company
Wall Street Reform and Consumer investigation or judicial or administrative action of (or a subsidiary thereof) based on certain
the Commission based upon or related to such disclosures of securities law violations to ‘‘a person
Protection Act, Public Law 111–203, 12
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information; or (iii) in making disclosures that are with supervisory authority over the employee (or
4 Stat. 1376, 1841–49 (2010), Congress required or protected under the Sarbanes-Oxley Act such other person working for the employer who
amended the Exchange Act to add of 2002 (15 U.S.C. 7201 et seq.), this chapter [i.e., has the authority to investigate, discovery, or
Section 21F, 15 U.S.C. 78u-6(h)(1), the Exchange Act], including section 78j–1(m) of terminate misconduct)’’ or to a ‘‘Federal regulatory
this title [i.e., Section 10A(m) of the Exchange Act], or law enforcement agency.’’ 15 U.S.C. 1514A(1).
entitled ‘‘Securities Whistleblower section 1513(e) of Title 18, and any other law, rule, 2 Securities Whistleblower Incentives and
Incentives and Protection.’’ Section 21F or regulation subject to the jurisdiction of the Protections, 76 FR 34300, 34304 (June 13, 2011)
established a series of new incentives Commission.’’ (emphasis in original).

VerDate Sep<11>2014 14:22 Aug 07, 2015 Jkt 235001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\10AUR1.SGM 10AUR1
47830 Federal Register / Vol. 80, No. 153 / Monday, August 10, 2015 / Rules and Regulations

individual is] a whistleblower if . . . the employment retaliation protections and, thus, jeopardize the investor-
[the individual] provide[d] that provided by Section 21F, that protection and law-enforcement benefits
information in a manner described in construction is not consistent with Rule that can result from internal reporting.8
Section 21F(h)(1)(A) of the Exchange 21F–2 and would undermine our overall Under our interpretation, an individual
Act[.]’’ Rule 21F–2(b)(1)(ii). This goals in implementing the who reports internally and suffers
definition—unlike the whistleblower whistleblower program. We reach this employment retaliation will be no less
definition in Rule 21F–2(a) that applies conclusion for several reasons. protected than an individual who comes
to the award and confidentiality First, as the text of Rule 21F–2(b)(1) immediately to the Commission.
provisions—does not require reporting states, ‘‘for purposes of Section 21F’s Providing equivalent employment
in accordance with Rule 21F–9(a)’s employment retaliation protections,’’ an retaliation protection for both situations
procedures. individual qualifies as a whistleblower removes a potentially serious
We also adopted Rule 21F–9(a) to entitled to the employment retaliation disincentive to internal reporting by
specify the reporting procedures that protection whenever he or she makes employees in appropriate
must be followed by an individual who any of the broader array of disclosures circumstances. A contrary interpretation
seeks to qualify as a whistleblower specified in Section 21F(h)(1)(A).5 The would undermine the other incentives
under Rule 21F–2(a) and thus to be fact that Rule 21F–2(b)(1) expressly and that were put in place through the
eligible for an award and the heightened specifically applies in the employment Commission’s whistleblower rules in
confidentiality protections. Rule 21F– retaliation context demonstrates that it order to encourage internal reporting.9
9(a) provides in pertinent part that, ‘‘[t]o should control over Rule 21F–9(a).6
be considered a whistleblower under Second, Rule 21F–2(b)(1)(iii) For the foregoing reasons, we are
Section 21F . . . , [an individual] must expressly provides that ‘‘[t]he anti- issuing this interpretation to clarify that,
submit [his or her] information . . . by retaliation protections apply whether or for purposes of Section 21F’s
either of these methods: (1) Online, not [an individual] satisf[ies] the employment retaliation protections, an
through the Commission’s Web site . . . requirements, procedures and individual’s status as a whistleblower
; or (2) By mailing or faxing a Form TCR conditions to qualify for an award.’’ As does not depend on adherence to the
. . . to the SEC Office of the Rule 21F–2(a)(2) makes plain, the reporting procedures specified in Rule
Whistleblower . . . .’’ reporting procedures specified in Rule 21F–9(a).
Since our adoption of the 21F–9(a) are among the procedures that
whistleblower rules, we have List of Subjects in 17 CFR Part 241
an individual must follow to recover an
consistently understood Rule 21F–9(a) award. The contrast between these Securities.
as a procedural rule that applies only to provisions further supports our
help determine an individual’s status as Amendments to the Code of Federal
interpretation that the availability of
a whistleblower for purposes of Section employment retaliation protection is not Regulations
21F’s award and confidentiality conditioned on an individual’s
provisions.3 Similarly, it has been our For the reasons set out above, the
adherence to the Rule 21F–9(a) Commission is amending title 17,
consistent view that Rule 21F–2(b)(1) procedures.7
alone controls the reporting methods chapter II of the Code of Federal
Finally, our interpretation best Regulations as set forth below:
that will qualify an individual as a comports with our overall goals in
whistleblower for the retaliation implementing the whistleblower 8 We note that a contrary interpretation would
protections. program. Specifically, by providing
Notwithstanding our view that Rule also create a two-tiered scheme of employment
employment retaliation protections for retaliation protection even as between individuals
21F–2(b)(1) alone controls in the context who report possible securities fraud violations or
individuals who report internally first to
of determining the relevant reporting violations of SEC rules or regulations to the
a supervisor, compliance official, or
procedures for an individual to qualify Commission; specifically, if an individual comes
other person working for the company forward to report information to the Commission in
as a whistleblower eligible for Section
that has authority to investigate, a manner other than those specified in Rule
21F’s employment retaliation 21F–9(a), that individual would not qualify for the
discover, or terminate misconduct, our
protections, the Court of Appeals for the employment retaliation protections of Section 21F.
interpretive rule avoids a two-tiered
Fifth Circuit expressed some See Section 21F(h)(1)(A)(i) & (ii). But under our
structure of employment retaliation reading of Section 21F and the whistleblower rules,
uncertainty about this reading in a
protection that might discourage some such individuals would be afforded employment
recent decision.4 Although we retaliation protection under the catchall language of
appreciate that if read in isolation Rule individuals from first reporting
Section 21F(h)(1)(A)(iii)—which incorporates the
21F–9(a) could be construed to require internally in appropriate circumstances protections of Section 806 of the Sarbanes-Oxley
that an individual must report to the Act—irrespective of the fact that they did not
5 In contrast, Rule 21F–2(a)(2) states that ‘‘[t]o be
comply with the technical reporting requirements
Commission before he or she will eligible for an award,’’ an individual must submit of Rule 21F–9(a).
qualify as a whistleblower eligible for original information ‘‘to the Commission in 9 See, e.g., Exchange Act Rule 21F–4(c)(3)
accordance with the procedures and conditions (providing that an individual who reports internally
3 See generally SEC Staff Report, 2014 Annual described in Rules 21F–4, 21F–8, and 21F–9.’’ can collect a whistleblower award from the
Report to Congress on the Dodd-Frank (Emphasis added). In addition, Rule 21F–2(a)(1) Commission if his internal report to the company
Whistleblower Program, 19 (available at: http:// specifically cross-references the procedures set or entity results in a successful covered action);
www.sec.gov/about/offices/owb/annual-report- forth in Rule 21F–9(a), whereas Rule 21F–2(b)(1) Exchange Act Rule 21F–4(b)(7) (providing that an
2014.pdf) (explaining that from the time it does not contain a similar cross-reference. individual who first reports pursuant to an entity’s
6 See, e.g., In re Gulevsky, 362 F.3d 961, 963 (7th
promulgated the whistleblower rules, the internal whistleblower, legal, or compliance
Commission has taken the view that the Cir. 2004) (‘‘[W]hen both a specific and a general procedures for reporting allegations of possible
employment retaliation protections ‘‘apply not just provision govern a situation, the specific one violations of law and within 120 days reports to the
Lhorne on DSK7TPTVN1PROD with RULES

to individuals who report to the SEC but also to controls.’’) (quoting Morales v. Trans World Commission will be treated for purposes of an
individuals when they, among other things, report Airlines, Inc., 504 U.S. 374, 384–85, 112 S.Ct. 2031, award as if the submission to the Commission had
potential securities law violations internally at 119 L.Ed.2d 157 (1992)). been made at the earlier internal reporting date);
public companies’’; also explaining that the 7 We note that, other than Rule 21F–2(b), all of Exchange Act Rule 21F–6(a)(4) (providing that
Commission has ‘‘consistently’’ opposed the the other rules that the Commission adopted to when determining the amount of an award, the
contrary interpretation). implement the whistleblower program deal Commission will consider as a plus-factor the
4 Asadi v. G.E. Energy (U.S.A.), L.L.C., 720 F.3d exclusively with the award and confidentiality whistleblower’s participation in an entity’s internal
620, 630 (5th Cir. 2013). provisions. compliance procedures).

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Document Created: 2015-12-15 12:12:02
Document Modified: 2015-12-15 12:12:02
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Interpretation.
Dates		Effective August 10, 2015.
Contact		Jane Norberg, Deputy Chief of the Office of the Whistleblower, Division of Enforcement, at (202) 551- 4790; Brian A. Ochs, Senior Special Counsel, Office of the General Counsel, at (202) 551-5067; Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
FR Citation		80 FR 47829