By Katanga Johnson
WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission on Thursday proposed changing the rules of its whistleblower program to make it easier for tipsters to claim bounties.
The changes, which are subject to public consultation, would scrap a Trump-era rule that had afforded the agency greater discretion to determine the size of whistleblower payouts.
Critics said that Trump rule deterred whistleblowers since it gave the SEC the discretion in some instances to lower awards.
The new proposal guarantees that the SEC would consider the dollar amount of a potential award for the "limited purpose" of increasing rather than lowering it.
It would also make it easier for tipsters to claim awards when their information leads to a successful enforcement action brought by other federal agencies, known under the program as a 'related action.'
SEC Chair Gary Gensler said in a statement that the changes aim to ensure whistleblowers are both incentivized and appropriately rewarded for their efforts in reporting potential violations of the law to the agency.
The SEC's whistleblower program was created by Congress after the 2007-2009 global financial crisis and receives thousands of tips annually.
Currently, the SEC can reward tipsters whose original information leads to a penalty exceeding $1 million with rewards of between 10% and 30% of the fine.
The SEC may also pay a reward in a related enforcement action brought by certain other agencies, provided that settlement was based on the same information the tipster originally gave to the SEC.
The proposed changes to the related action rule would afford tipsters more choice to decide whether to receive an award from the SEC or the authority administering the other award program.
The whistleblower would not be required to select which program to receive the award from until both programs had determined the award amount they would pay.