9280 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

(a) Comments Due Date 

The FAA must receive comments on this 

airworthiness directive (AD) action by April 

4, 2022. 

(b) Affected ADs 

This AD replaces AD 2021–05–05, 

Amendment 39–21448 (86 FR 13972, March 

12, 2021) (AD 2021–05–05). 

(c) Applicability 

This AD applies to Airbus Helicopters 

Model SA–365N1, AS–365N2, AS 365 N3, 

SA–366G1, EC 155B, and EC155B1 

helicopters, all serial numbers, certificated in 

any category. 

(d) Subject 

Joint Aircraft System Component (JASC) 

Code 6500, Tail Rotor Drive System. 

(e) Unsafe Condition 

This AD was prompted by a report where 

during a landing phase, a helicopter lost tail 

rotor pitch control, which was caused by 

significant damage to the tail rotor gearbox 

(TGB) control rod double bearing (bearing). 

This AD was also prompted by the 

determination that reduced inspection 

intervals, updated corrective actions, and 

increased compliance time for replacement of 

affected parts are necessary to address the 

unsafe condition. The FAA is issuing this AD 

to prevent damage to the bearing, which if 

not addressed, could result in loss of yaw 

control of the helicopter. 

(f) Compliance 

Comply with this AD within the 

compliance times specified, unless already 

done. 

(g) Required Actions 

(1) For Model SA–365N1, AS–365N2, AS 

365 N3, EC 155B, and EC155B1 helicopters: 

Except as specified in paragraph (h) of this 

AD, comply with all required actions and 

compliance times specified in, and in 

accordance with, European Union Aviation 

Safety Agency (EASA) AD 2021–0171, dated 

July 19, 2021 (EASA AD 2021–0171). 

(2) For Model SA–366G1 helicopters: 

Before further flight after the effective date of 

this AD, accomplish the actions (e.g., modify 

the helicopter by replacing the TGB control 

shaft guide bushes, do repetitive inspections 

of the TGB magnetic plug and applicable 

corrective actions; do repetitive replacements 

of a certain bearing; and modify the 

helicopter by replacing the TGB) specified in 

paragraph (g)(l) of this AD using a method 

approved by the FAA. 

(h) Exceptions to EASA AD 2021–0171 

(1) Where EASA AD 2021–0171 refers to its 

effective date, this AD requires using the 

effective date of this AD. 

(2) Where EASA AD 2021–0171 refers to 

flight hours (FH), this AD requires using 

hours time-in-service. 

(3) Where EASA AD 2021–0171 requires 

action after the last flight of the day or 

‘‘ALF,’’ this AD requires those actions before 

the first flight of the day. 

(4) This AD does not mandate compliance 

with the ‘‘Remarks’’ section of EASA AD 

2021–0171. 

(5) Where paragraph (2) of EASA AD 2021– 

0171 requires inspections (checks) to be done 

‘‘in accordance with the instructions of 

Paragraph 3.B.1 of the applicable inspection 

ASB,’’ for this AD, those instructions are for 

reference only and are not required for the 

actions in paragraph (2) of EASA AD 2021– 

0171. The inspections (checks) required by 

paragraph (2) of EASA AD 2021–0171 may be 

performed by the owner/operator (pilot) 

holding at least a private pilot certificate and 

must be entered into the aircraft records 

showing compliance with this AD in 

accordance with 14 CFR 43.9 (a)(1) through 

(4) and 14 CFR 91.417(a)(2)(v). The record 

must be maintained as required by 14 CFR 

91.417 or 135.439. 

(6) Where paragraph (5) of EASA AD 2021– 

0171 specifies ‘‘if any discrepancy is 

detected, as defined in the applicable 

inspection ASB, before next flight, 

accomplish the applicable corrective 

action(s) in accordance with the instructions 

of Paragraph 3.B.1 of the applicable 

inspection ASB,’’ for this AD, a qualified 

mechanic must add oil to the TGB to the 

‘‘max’’ level if the oil level is not at 

maximum. The instructions are for reference 

only and are not required for the actions in 

paragraph (5) of EASA AD 2021–0171. 

(7) Where paragraph (6) of EASA AD 2021– 

0171 refers to ‘‘any discrepancy,’’ for this AD, 

discrepancies include the presence of 

particles and other conditions such as 

abrasions, scales, flakes, and splinters. 

(8) Where the service information referred 

to in EASA AD 2021–0171 specifies to 

perform a metallurgical analysis and contact 

the manufacturer if collected particles are not 

clearly characterized, this AD does not 

require contacting the manufacturer to 

determine the characterization of the 

particles collected. 

(9) Although service information 

referenced in EASA AD 2021–0171 specifies 

to scrap parts, this AD does not include that 

requirement. 

(10) Although service information 

referenced in EASA AD 2021–0171 specifies 

reporting information to Airbus Helicopters, 

filling in a ‘‘particle detection’’ follow-up 

sheet, and returning a ‘‘bearing monitoring 

sheet’’ to Airbus Helicopters, this AD does 

not include those requirements. 

(11) Although service information 

referenced in EASA AD 2021–0171 specifies 

returning certain parts to an approved 

workshop and returning certain parts to 

Airbus Helicopters, this AD does not include 

those requirements. 

(i) No Reporting Requirement 

Although the service information 

referenced in EASA AD 2021–0171 specifies 

to submit certain information to the 

manufacturer, this AD does not include that 

requirement. 

(j) Special Flight Permit 

Special flight permits may be issued in 

accordance with 14 CFR 21.197 and 21.199 

provided that there are no passengers 

onboard. 

(k) Alternative Methods of Compliance 

(AMOCs) 

(1) The Manager, International Validation 

Branch, FAA, has the authority to approve 

AMOCs for this AD, if requested using the 

procedures found in 14 CFR 39.19. In 

accordance with 14 CFR 39.19, send your 

request to your principal inspector or local 

Flight Standards District Office, as 

appropriate. If sending information directly 

to the manager of the certification office, 

send it to the attention of the person 

identified in paragraph (l)(2) of this AD. 

Information may be emailed to: 9-AVS-AIR730-AMOC@faa.gov. 

(2) Before using any approved AMOC, 

notify your appropriate principal inspector, 

or lacking a principal inspector, the manager 

of the local flight standards district office/ 

certificate holding district office. 

(l) Related Information 

(1) For EASA AD 2021–0171, contact 

EASA, Konrad-Adenauer-Ufer 3, 50668 

Cologne, Germany; phone: +49 221 8999 000; 

email: ADs@easa.europa.eu; internet: 

www.easa.europa.eu. You may find EASA 

AD 2021–0171 on the EASA website at 

https://ad.easa.europa.eu. You may view this 

material at the FAA, Office of the Regional 

Counsel, Southwest Region, 10101 Hillwood 

Pkwy., Room 6N–321, Fort Worth, TX 76177. 

For information on the availability of this 

material at the FAA, call (817) 222–5110. 

This material may be found in the AD docket 

at https://www.regulations.gov by searching 

for and locating Docket No. FAA–2022–0102. 

(2) For more information about this AD, 

contact Hal Jensen, Aerospace Engineer, 

Operational Safety Branch, Compliance & 

Airworthiness Division, FAA, 950 L’Enfant 

Plaza N SW, Washington, DC 20024; 

telephone (202) 267–9167; email hal.jensen@

faa.gov. 

Issued on February 11, 2022. 

Lance T. Gant, 

Director, Compliance & Airworthiness 

Division, Aircraft Certification Service. 

[FR Doc. 2022–03515 Filed 2–17–22; 8:45 am] 

BILLING CODE 4910–13–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 240 

[Release No. 34–94212; File No. S7–07–22] 

RIN 3235–AN03 

The Commission’s Whistleblower 

Program Rules 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’) 

is proposing for public comment 

amendments to the Commission’s rules 

implementing its whistleblower 

program. The Securities Exchange Act 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9281 

1 15 U.S.C. 78u–6(a)(5) (‘‘The term ‘related 

action’, when used with respect to any judicial or 

administrative action brought by the Commission 

under the securities laws, means any judicial or 

administrative action brought by an entity 

described in subclauses (I) through (IV) of 

subsection (h)(2)(D)(i) [of the Exchange Act] that is 

based upon the original information provided by a 

whistleblower . . . that led to the successful 

enforcement of the Commission action.’’). 

2See 15 U.S.C. 78u–6(b). 

3The IPF, which was established as part of the 

whistleblower program, is a statutorily established 

fund within the U.S. Department of the Treasury 

from which Commission whistleblower awards are 

paid. See Exchange Act Section 21F(g)(3), 15 U.S.C. 

78u–6. The IPF operates under a continuing 

appropriation and has a statutorily created selfreplenishing process. Id. 

4Securities Whistleblower Incentives and 

Protections, Release No. 34–64545, 76 FR 34300 

(June 13, 2011). See also Proposed Rules for 

Implementing the Whistleblower Provisions of 

Section 21F of the Securities Exchange Act of 1934, 

75 FR 70502 (Nov. 17, 2010). 

5Whistleblower Program Rules, Release No. 34– 

83557, 83 FR 34702 (proposed June 28, 2018) (17 

CFR 240.21F–1 through 240.21F–18). 

6Whistleblower Program Rules, Release No. 34– 

89963, 85 FR 70898 (Sept. 23, 2020) (17 CFR 

240.21F–1 through 17 CFR 240.21F–18). 

7These amendments included a new rule 17 CFR 

240.21F–18. 

of 1934 (‘‘Exchange Act’’) provides for, 

among other things, the issuance of 

monetary awards to any eligible 

whistleblower who voluntarily provides 

the SEC with original information about 

a securities law violation that leads to 

the SEC’s success in obtaining a 

monetary order of more than a million 

dollars in a covered judicial or 

administrative action brought by the 

SEC (‘‘covered action’’). If an eligible 

whistleblower qualifies for an award, 

Section 21F requires an award that is at 

least 10 percent, but no more than 30 

percent, of the amount of the monetary 

sanctions collected in the covered 

action. The receipt of an award in a 

covered action also enables a 

whistleblower to qualify for an award in 

connection with judicial or 

administrative actions based on the 

whistleblower’s same original 

information and brought by the U.S. 

Department of Justice (‘‘DOJ’’) and 

certain other statutorily identified 

agencies or entities (‘‘related actions’’). 

The proposed rules would make two 

substantive changes to the 

Commission’s whistleblower rules that 

implement the whistleblower program, 

as well as several conforming 

amendments and technical corrections. 

DATES: Comments should be received on 

or before April 11, 2022. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/submitcomments.htm); or 

• Send an email to rule-comments@

sec.gov. Please include File Number S7– 

07–22 on the subject line; or 

Paper Comments 

• Send paper comments to, Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to File 

Number S7–07–22. This file number 

should be included on the subject line 

if email is used. To help us process and 

review your comments more efficiently, 

please use only one method of 

submission. The Commission will post 

all comments on the Commission’s 

website (http://www.sec/gov/rules/ 

proposed.shtml). Typically, comments 

are also available for website viewing 

and printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Operating conditions 

may limit access to the Commission’s 

public reference room. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Emily Pasquinelli, Office of the 

Whistleblower, Division of 

Enforcement, at (202) 551–5973; 

Hannah W. Riedel, Office of the General 

Counsel, at (202) 551–7918, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: The 

Commission is proposing to amend the 

rules set forth in the table below. 

AMENDMENTS

Commission 

reference 

CFR citation 

(17 CFR) 

Rule 21F–3 ............... § 240.21F–3. 

Rule 21F–4 ............... § 240.21F–4. 

Rule 21F–6 ............... § 240.21F–6. 

Rule 21F–8 ............... § 240.21F–8. 

Rule 21F–10 ............. § 240.21F–10. 

Rule 21F–11 ............. § 240.21F–11. 

Table of Contents 

I. Introduction 

A. The Whistleblower Award Program 

B. Overview of the Proposed Rules 

II. Discussion of Proposed Rules 

A. Proposed Amendment to Exchange Act 

Rule 21F–3(b) Defining a ‘‘Comparable’’ 

Whistleblower Award Program for 

Related Actions 

1. The Comparability Approach 

2. Whistleblower’s Choice Option 

3. Other Alternatives 

B. Proposed Amendment to Exchange Act 

Rule 21F–6 Regarding Size of Award 

C. Proposed Technical Amendments to 

Rule 21F–4(c) and Rule 21F–8(e) 

III. General Request for Public Comment 

IV. Economic Analysis 

A. Economic Baseline 

B. Proposed Rules 

1. Proposed Rule 21F–3(b)(3) 

2. Proposed Rule 21F–6 

C. Additional Alternatives 

D. Effects of the Proposed Rules on 

Efficiency, Competition, and Capital 

Formation 

V. Small Business Regulatory Enforcement 

Fairness Act 

VI. Regulatory Flexibility Act Certification 

VII. Statutory Basis 

I. Introduction 

A. The Whistleblower Award Program 

Section 21F of the Exchange Act, 

among other things, directs that the 

Commission pay awards, subject to 

certain limitations and conditions, to 

whistleblowers who voluntarily provide 

the Commission with original 

information about a violation of the 

Federal securities laws and regulations 

that leads to the successful enforcement 

of a covered action and certain related 

actions brought by other statutorily 

identified authorities.1 Section 21F 

provides that an award must be at least 

10 percent, but no more than 30 percent, 

of the amount of the monetary sanctions 

collected in the action for which the 

award is granted.2 Whistleblower 

awards are paid from a dedicated 

Investor Protection Fund (‘‘IPF’’) created 

by Congress.3

In May 2011, the Commission 

adopted a comprehensive set of rules to 

implement the whistleblower program.4

Those rules, which were codified at 17 

CFR 240.21F–1 through 240.21F–17, 

provide the operative definitions, 

requirements, and processes related to 

the whistleblower program. In June 

2018, the Commission proposed 

amendments to the rules (‘‘Proposing 

Release’’ or ‘‘2018 Proposal’’).5 After 

reviewing the numerous public 

comments that were received in 

response to the 2018 Proposal, the 

Commission adopted various 

amendments to the whistleblower 

program rules (referred to 

interchangeably as ‘‘Adopting Release,’’ 

‘‘Final Rule,’’ and ‘‘2020 

Amendments’’) 6 in September 2020.7

Two of the rules amended in 

September 2020 are the subject of this 

proposing release. The first is 17 CFR 

240.21F–3(b)(3) (Rule 21F–3(b)(3)), 

which addresses situations in which the 

SEC’s whistleblower program and at 

least one other whistleblower program 


jspears on DSK121TN23PROD with PROPOSALS1
9282 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

8See Rule 21F–3(b)(3)(i) through (ii). 

9See Proposing Release, 83 FR 34704. 

10See Adopting Release, 85 FR 70910 (‘‘To clarify 

the Commission’s discretionary authority, we are 

modifying Rule 21F–6 to state that the Commission 

may consider the factors, and only the factors set 

forth in in Rule 21F–6, in relation to the facts and 

circumstances of each case in setting the dollar or 

percentage amount of the award. This new 

language, by expressly referring to setting the dollar 

or percentage amount of the award, makes clear that 

the Commission and the Claims Review Staff (CRS) 

may, in applying the Award Factors specified in 

Rule 21F–6(a) and (b) and setting the Award 

Amount, consider the potential dollar amount that 

corresponds to the application of any of the 

factors.’’) (internal footnotes omitted). 

11 In anticipation of the current proposal, the 

Commission released a statement on August 5, 

2021, that identifies procedures that are available to 

whistleblowers with claims pending while the 

current rulemaking is ongoing. Release No. 34– 

81207 (Aug. 5, 2021), available at https://

www.sec.gov/rules/policy/2021/34-92565.pdf. 

12Under Rule 21F–3(b)(3) as currently drafted, if 

the Commission fails to find that its program has 

the more direct or relevant connection to the action, 

then the Commission will deny the related-action 

award claim. The claimant is then left to pursue any 

claim for a whistleblower award with the other 

award program. 

13See, e.g., 12 U.S.C. 4205(d)(1) (establishing a 

whistleblower award program in connection with 

the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989, but capping awards at 

$1.6 million). 14See infra notes 24 and 57. 

may apply to the same related action. 

The 2020 Amendments authorized the 

Commission to determine, based on the 

facts and circumstances of the claims 

and misconduct at issue in the potential 

related action (among other factors), 

whether the Commission’s 

whistleblower program or the 

alternative whistleblower program has 

the more ‘‘direct or relevant connection 

to the [non-Commission] action.’’ 8 If the 

Commission determines that the other 

program has the more direct or relevant 

connection, the Commission will not 

deem the action a related action. Any 

award to be made on the action must 

come from the other whistleblower 

program. 

The second rule that is the subject of 

this proposing release is Rule 21F–6, 

which concerns the Commission’s 

discretion to apply award factors and set 

award amounts. Before the 2020 

Amendments, the rule text (with the 

exception of Rule 21F–6(a)(3)) did not 

explicitly address whether the 

Commission could consider the 

potential dollar amount of an award 

when setting awards; rather, the rule 

text generally referred to setting awards 

as a percentage of the monetary 

sanctions recovered.9 The 2020 

Amendments added language to Rule 

21F–6 stating that the Commission has 

discretion to consider the dollar amount 

of a potential award when making an 

award determination.10

B. Overview of the Proposed Rules 

The Commission is considering 

further revising Rule 21F–3(b)(3) and 

Rule 21F–6, as well as making some 

related conforming modifications to 

Rules 21F–10 and 21F–11 and technical 

amendments to Rule 21F–4(c) and Rule 

21F–8(e). These proposed rule changes 

are being offered for public comment to 

help ensure that eligible, meritorious 

whistleblowers are appropriately 

rewarded for their efforts and that our 

rules do not inadvertently create 

disincentives to reporting potential 

securities-law violations to the 

Commission.11 The Commission 

anticipates that all of the proposed rule 

changes, if adopted, would apply to all 

new whistleblower award applications 

filed after the effective date of the 

amended final rules, as well as all 

whistleblower award applications that 

are pending and have not been the 

subject of a final order of the 

Commission by the effective date. 

1. Allowing awards for related actions 

where an alternative award program 

could yield an award that is 

meaningfully lower than the 

Commission’s whistleblower program 

would allow. The Commission is 

proposing to amend Rule 21F–3(b)(3) to 

revise the scope of potential related 

actions (i.e., the non-Commission 

actions) that could be covered by the 

SEC’s whistleblower program in 

situations where another award program 

might also apply to that same action. 

Currently, Rule 21F–3(b)(3) provides 

that if another award program might 

apply to an action, then the Commission 

will deem the action a potential related 

action (and process the application 

further to determine if an award is 

appropriate) only if the SEC’s 

whistleblower program has the ‘‘more 

direct or relevant connection’’ to the 

action (relative to the other program’s 

connection to the action).12 Under the 

proposed amendments to Rule 21F– 

3(b)(3) (see Part II(A)(1) below), if a 

claimant files a related-action award 

application, and the alternative award 

program is not comparable, either 

because the statutory award range is 

more limited, or because awards are 

subject to an award cap (and the nonCommission action otherwise satisfies 

the criteria in Rule 21F–3(b)(1)), the 

Commission would treat the nonCommission action as a related action 

covered by the SEC’s program (assuming 

the other criteria of Rule 21F–3(b) are 

met) regardless of whether the 

alternative award program has a more 

direct or relevant connection to the 

action.13 The Comparability Approach 

would also provide, however, that the 

Commission would deem a matter 

eligible for related-action status without 

regard to which program has the more 

direct and relevant connection to the 

action, if the maximum award in the 

related action would not exceed $5 

million. (As discussed in Part II(A)(1)– 

(2), the Commission is also requesting 

public comment on several other 

alternative approaches, including an 

option that would allow a meritorious 

whistleblower to decide whether to 

receive a related-action award from the 

Commission 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.) 

2. Clarifying the Commission’s use of 

discretion to consider dollar amounts 

when determining awards. The 

Commission is also proposing for public 

comment a new paragraph (d) to Rule 

21F–6, which would affirm the 

Commission’s statutory authority to 

consider the dollar amount of a 

potential award when determining the 

award amount, but clarifies that the 

Commission may exercise its discretion 

to use that authority for the limited 

purpose of increasing the award amount 

and may not use it for the purpose of 

decreasing an award (either when 

applying the award factors under Rule 

21F–6(b) or otherwise). 

3. Conforming and technical 

amendments. In addition to the above 

substantive amendments, the 

Commission is proposing minor 

modifications to Exchange Act Rules 

21F–10 and 21F–11 so that those rules 

conform to the proposed changes 

discussed above.14 Further, the 

Commission is proposing technical 

revisions to Rule 21F–4(c) and to Rule 

21F–8 to correct errors in the rule text. 

II. Discussion of Proposed Amendments 

A. Proposed Amendment to Exchange 

Act Rule 21F–3(b) Defining a 

‘‘Comparable’’ Whistleblower Award 

Program for Related Actions 

Under Exchange Act Section 21F(b), a 

whistleblower who obtains an award 

based on a Commission covered action 

also may be eligible for an award based 

on monetary sanctions that are collected 

in a related action. Exchange Act 

Section 21F(a)(5) and Exchange Act 

Rule 21F–3(b)(1) provide that a related 

action is a judicial or administrative 

action that is: 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9283 

15A matter will qualify as a related action even 

if the whistleblower did not provide the original 

information to the other authority or entity if the 

Commission itself provided the whistleblower’s 

original information to the authority or entity. Cf. 

17 CFR 240.21F–7(a)(2) (Rule 21F–7(a)(2)). 

16Exchange Act Rule 21F–3(b)(2) provides that 

essentially the same criteria that are used to assess 

whether a whistleblower should receive an award 

in connection with a Commission covered action 

will be applied to determine whether the 

whistleblower should also receive an award in 

connection with the potential related action. 

17The Commission stated that the purpose of 

Rule 21F–3(b)(3) was to prevent multiple 

recoveries, see Adopting Release, 85 FR 70908, and 

cited as the basis for adopting such rules the 

provision in Exchange Act Section 21F(b)(1) that 

states awards are to be made based on ‘‘regulations 

prescribed by the Commission,’’ the specific 

rulemaking authority of Exchange Act Section 

21F(j) to issue rules governing the whistleblower 

program, and the Commission’s general rulemaking 

authority in Exchange Act Section 23(a), see id. at 

70902 & n.20. 

18See id. at 70908. 

19 Id. 20The Commission further explained that it was 

unaware of any time in the modern era in which 

legislation had authorized the Federal Government 

to share with a whistleblower more than 30 percent 

of its monetary recovery from a successful action. 

21See 85 FR 70909. 

22See Attorney General Holder’s Remarks on 

Financial Fraud Prosecutions at NYU School of Law 

(Sept. 17, 2014) (referring to this $1.6 million cap 

as a ‘‘paltry sum’’ that ‘‘is unlikely to induce an 

employee to risk his or her lucrative career in the 

financial sector’’ by reporting financial crimes). 

(i) Brought by DOJ, an appropriate 

regulatory authority (as defined in 

Exchange Act Rule 21F–4(g)), a selfregulatory organization (as defined in 

Exchange Act Rule 21F–4(h)), or a state 

attorney general in a criminal case; 

(ii) Based on the same original 

information that the whistleblower 

voluntarily provided both to the 

Commission and to the authority or 

entity that brought the related action; 15

and 

(iii) Resolved in favor of the authority 

or entity that brought the action, and the 

whistleblower’s information led to the 

successful resolution.16

In September 2020, the Commission 

adopted a new Exchange Act Rule 21F– 

3(b)(3) to address situations where both 

the Commission’s whistleblower 

program and at least one other, separate 

whistleblower award program might 

apply (hereinafter ‘‘the MultipleRecovery Rule’’).17 As the Commission 

explained, the potential for another 

whistleblower award program to apply 

to a potential related action—and the 

accompanying risk of multiple 

recoveries—had become increasingly 

apparent over the course of the 

Commission’s decade of experience 

implementing and administering the 

award program.18

The Multiple-Recovery Rule 

authorizes the Commission to pay an 

award on an action potentially covered 

by a second award program only if the 

Commission determines that the SEC’s 

whistleblower program has a more 

direct or relevant connection to the 

action than the other award program. To 

assess whether a potential related action 

has a more ‘‘direct or relevant’’ 

connection to the SEC’s program or the 

other potentially applicable program, 

the Multiple-Recovery Rule provides 

that the Commission will consider: (i) 

The relative extent to which the 

misconduct charged in the potential 

related action implicates the public 

policy interests underlying the Federal 

securities laws (such as investor 

protection) rather than other lawenforcement or regulatory interests; (ii) 

the degree to which the monetary 

sanctions imposed in the potential 

related action are attributable to conduct 

that also underlies the Federal securities 

law violations that were the subject of 

the Commission’s covered action; and 

(iii) whether the potential related action 

involves state-law claims, as well as the 

extent to which the state may have a 

whistleblower award program that 

potentially applies to that type of lawenforcement action. 

Another provision of the MultipleRecovery Rule directs that if a relatedaction claimant has already received an 

award from another program, that 

claimant will not receive an award from 

the Commission. Relatedly, the 

Multiple-Recovery Rule provides that if 

a related-action claimant was denied an 

award from the other program, the 

claimant will not be able to readjudicate any fact decided against him 

or her by the other program. And if the 

Commission decides that the SEC’s 

whistleblower program has the more 

direct or relevant connection to the 

potential related action, the MultipleRecovery Rule provides that no payment 

will be made on the award unless the 

claimant promptly and irrevocably 

waives any claim to an award from the 

other program. 

In adding the Multiple-Recovery Rule 

to Exchange Act Rule 21F–3(b), the 

Commission explained that it was 

‘‘codif[ying] the approach the 

Commission has previously taken where 

another award program is available in 

connection with an action for which a 

related-action award is sought.’’ 19

Further, the Commission explained that 

permitting multiple recoveries on the 

same related action could be viewed as 

inconsistent with congressional intent 

in two respects. First, it could result in 

a whistleblower recovering in excess of 

the 30 percent ceiling that Congress has 

established for Federal whistleblower 

award programs in the modern era.20

Second, the related-action component of 

the SEC’s Whistleblower Program is 

structured under Section 21F of the 

Exchange Act as a supplemental 

component of the program. If the 

Commission is able to bring a successful 

covered action based on the 

whistleblower’s original information, 

then the whistleblower is given an 

opportunity to obtain additional 

financial rewards for the ancillary 

recoveries that may be collected in a 

related action based on that same 

original information. But the 

Commission explained that neither the 

text nor the legislative history of Section 

21F indicated that Congress intended 

this ancillary component of the SEC’s 

whistleblower program to displace or 

otherwise operate as an alternative to a 

more directly relevant award program 

that may be specifically tailored to 

apply to a specific type or class of 

actions. The Commission also observed 

that in situations where another 

program would apply, the other award 

program should provide a sufficient 

financial incentive to encourage 

individuals to report misconduct 

without the need for any additional 

incentive from the related-action 

component of the Commission’s 

whistleblower program.21

Since the Multiple-Recovery Rule was 

adopted, the Commission has received 

(or otherwise learned of the potential 

for) a number of whistleblower award 

applications involving potential related 

actions that implicate (or may implicate) 

at least one other award program. Of 

particular significance, some of these 

recent matters concern the 

whistleblower award program that is 

administered in connection with the 

Financial Institutions Reform, Recovery 

and Enforcement Act of 1989 

(‘‘FIRREA’’), which has a statutory cap 

of only $1.6 million (‘‘FIRREA awards 

program’’).22 As suggested above, an 

important consideration underlying the 

adoption of the Multiple-Recovery Rule 

was that—even with the Commission’s 

determination not to pay on potential 

related actions that have a more direct 

or relevant connection to an alternative 

award program—the adoption of the 

Multiple-Recovery rule would not 

appreciably impact a potential 

whistleblower’s financial incentive to 

come forward. As the Commission 

explained, this is because potential 

‘‘whistleblowers would still stand to 

receive an award’’ from the Commission 

on the covered action and from the 

other program on the potential related 


jspears on DSK121TN23PROD with PROPOSALS1
9284 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

23See 85 FR 70908. 

24The Commission intends to make a clarifying 

amendment to Exchange Act Rule 21F–11(c) so that 

it states that the Office of the Whistleblower is 

authorized to contact the agency or entity 

administering an alternative award program to 

ensure that the related-action award claimant has 

fully complied with the terms of Exchange Act Rule 

21F–3(b)(3) when a second, alternative award 

program is implicated by an underlying action. If 

the Commission is ultimately unable to receive the 

information that it needs to ensure to its satisfaction 

that the claimant has fully complied with Rule 21F– 

3(b)(3), this can be a basis for denying the award 

claim. The authorization that would be expressly 

added to Rule 21F–11(c) by the proposed 

amendment follows presently from the operation of 

existing Rule 21F–3(b)(3) and the proposed 

amendment would merely confirm that authority. 

25The proposed rule would also provide that a 

program would not be deemed comparable if 

awards under that program are entirely 

discretionary. Our own experience with a 

discretionary award program prior to the enactment 

of Exchange Act Section 21F’s mandatory award 

program leads us to have significant concerns that 

discretionary programs may not have the same 

programmatic importance to agencies, and may not 

be administered with the same rigor, as mandatory 

award programs. See Office of the Inspector 

General, Assessment of the SEC’s Bounty Program, 

Report No. 474 (March 29, 2009), at 4–5, available 

at www.sec.gov/about/offices/oig/reports/audits/ 

2010/474.pdf (stating that the Commission made 

five awards totaling less than $160,000 over the 20- 

year period from 1989 until 2009 under its former 

insider-trading ‘‘bounty program’’ for which 

‘‘bounty determinations, including whether, to 

whom, or in what amount to make payments, [were] 

within the sole discretion of the SEC’’). That prior 

experience also suggests to us that discretionary 

programs may garner lower levels of interest from 

the public because of the additional uncertainty of 

receiving an award. See id. (explaining that the 

‘‘Commission ha[d] not received a large number of 

applications from individuals seeking a bounty’’ 

and that the program was ‘‘not widely recognized 

inside or outside the Commission’’). Together these 

factors may substantially reduce the willingness of 

whistleblowers to blow the whistle. See Letter from 

Kohn, Kohn & Colapinto, LLP, Comment offered in 

connection with Proposing Release No. 34–83557 

regarding Related Actions and Proposed Rule 21F– 

3(b)(4) (Sept. 10, 2020), available at https://

www.sec.gov/comments/s7-16-18/s71618-7797952- 

223596.pdf (stating that discretionary award 

programs do ‘‘not meet the same standards’’ that 

Exchange Act Section 21F establishes). To forestall 

this risk, we think it appropriate to deem 

discretionary programs presumptively lacking 

sufficient comparability to our own program for 

purposes of Proposed Rule 21F–3(b)(3). 

26See Indiana Code 23–19–7–1 et seq. 

27FIRREA authorizes DOJ to sue for civil 

penalties when a person engages in certain criminal 

conduct, including mail, wire, and bank fraud. A 

court may impose penalties up to $1 million per 

violation or $5 million for a continuing violation. 

12 U.S.C. 1833a(b)(1) and (2). Further, a court may 

award greater penalties depending on the amount 

of the violator’s gain or victims’ losses that are 

connected to the FIRREA violations. Id. at 

1833a(b)(3) (providing that a court may impose 

higher pecuniary penalties if either the amount of 

the wrongdoer’s pecuniary gain from the FIRREA 

violation or the amount of the pecuniary loss to a 

victim exceeds the penalty amounts specified in the 

statute, although any penalty may not exceed the 

total amount of the wrongdoer’s gains or the 

victims’ losses). 

28Under the FIRREA award program a 

whistleblower is entitled to between 20 percent and 

30 percent of the first $1 million recovered 

pursuant to the execution of a judgment, order, or 

settlement, between 10 percent and 20 percent of 

the next $4 million recovered, and between 5 

percent and 10 percent of the next $5 million 

recovered. Id. at 4205(d)(1)(A)(i). Thus, awards 

under this program are effectively capped at $1.6 

million (i.e., 30 percent of $1 million [$300,000] 

plus 20 percent of the next $4 million [$800,000], 

plus 10 percent of the next $5 million [$500,000] 

but nothing beyond that). Id. at 4205(d)(2). 

29 18 U.S.C. 1031(g). 

action.23 This assumption may not be 

justified, however, under limited 

circumstances in which an alternate 

whistleblower program provides 

significantly fewer financial incentives 

than the Commission’s program. This 

seems most likely where the other 

award program has either a much lower 

award range than the Commission’s 

program or has an absolute dollar 

ceiling for all awards. 

Relatedly, we are concerned that the 

Multiple-Recovery Rule as currently 

structured creates a risk that two 

otherwise similarly situated meritorious 

whistleblowers whose tips led to 

comparably successful Commission and 

related actions would receive 

meaningfully different awards based 

solely on the award program to which 

the actions in question were more 

directly related or relevant. This 

potential for disparate treatment seems 

needlessly unfair given that the 

potential disparate results are not 

compelled by the statute, would not be 

connected to any relevant differences in 

either the claimants’ own efforts or the 

facts of the underlying related actions 

(such as the amounts collected, which 

are relevant to calculating the money 

paid to whistleblowers under Section 

21F(b) of the Exchange Act), and would 

not be grounded in any obvious SEC 

policy goals or programmatic 

considerations. 

Based on the foregoing concerns, the 

Commission is offering for public 

comment several proposals to change 

Rule 21F–3(b)(3). The principal 

proposal being offered is the 

‘‘Comparability Approach’’ (see Part 

II(A)(1) below). The Comparability 

Approach would retain the current rule 

but would make certain narrowly 

tailored amendments to address the 

fairness concerns identified above. The 

Comparability Approach would also 

allow the Commission to deem a matter 

eligible for related-action status in any 

case in which the maximum award that 

the Commission could pay on that 

action would not exceed $5 million, 

without assessing which of the two 

comparable whistleblower programs 

had the more direct and relevant 

connection to the action. 

Another alternative being offered for 

public comment is the ‘‘Whistleblower’s 

Choice Option’’ (see Part II(A)(2) below). 

It would involve a repeal of current Rule 

21F–3(b)(3) in favor of an approach that 

would no longer permit the Commission 

the exclusive authority to forgo 

processing an otherwise meritorious 

award claim simply because another 

award program may have a more direct 

or relevant connection to the underlying 

action.24

Finally, the Commission is offering 

for public comment the ‘‘Offset 

Approach’’ and the ‘‘Topping Off 

Approach’’ (see Part II(A)(3) below). 

Under the Offset Approach, Rule 21F– 

3(b)(3) would be repealed in its entirety 

in favor of a rule that would allow the 

Commission to make an award 

irrespective of the potential that another 

award program might apply, but to 

prevent a double recovery the 

Commission would offset from the 

Commission’s award any amount that 

other program paid on the action. Under 

the Topping-Off Approach, the current 

Rule 21F–3(b)(3) framework would be 

retained but the Commission would be 

granted the discretion to ‘‘top off’’ a 

covered-action award—that is, increase 

the award amount on the Commission’s 

own covered action (up to a total award 

of 30 percent)—if the Commission, in its 

discretion, concludes that the other 

whistleblower program’s award for the 

non-SEC action was inadequate. 

1. The Comparability Approach 

The Comparability Approach 

primarily focuses on situations where 

the maximum potential award that the 

alternative award program could 

authorize for an action would be an 

amount meaningfully lower than the 

maximum related-action award the 

Commission could grant (i.e., 30 percent 

‘‘in total, of what has been collected of 

the monetary sanctions imposed’’) 

either because the program involves a 

different award range or because it 

imposes a statutory award cap.25 An 

example of an award program that lacks 

a range comparable to the Commission’s 

program is the Indiana securities-law 

whistleblower award program; under 

the Indiana program, whistleblower 

awards may not exceed 10 percent of 

the money collected in a state securitieslaw enforcement action.26 Examples of 

award programs that have low statutory 

caps are the FIRREA award program,27

which has a $1.6 million cap,28 and the 

program administered in connection 

with the Major Frauds Act, which has 

a cap of $250,000.29

The Comparability Approach would 

address situations involving similar low 

award caps by generally excluding them 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9285 

30The FIRREA award program and the Major 

Fraud Act award program are discretionary, and 

thus would be excluded under the Comparability 

Approach for this additional reason, see supra note 

25. As a result, the low-award caps that those 

programs establish are referenced here purely for 

illustrative purposes. 

31 In assessing comparability, the Commission 

intends to compare the total amount that the other 

award program could award to all eligible 

whistleblowers for the potential related action to 

the total amount that the Commission’s award 

program could make to those individuals based on 

that same potential related action. 

32The words ‘‘another whistleblower program’’ in 

the opening sentence of Rule 21F–3(b)(3) would be 

replaced with ‘‘comparable whistleblower 

program.’’ 

33As discussed supra in note 25, an award 

program would not be comparable if it were 

discretionary instead of mandatory. To effectuate 

this, new paragraph (b)(3)(iv)(A) would also provide 

that an award program is not comparable if the 

authority or entity administering the other program 

possesses sole discretion to deny an award 

notwithstanding the fact that a whistleblower 

otherwise satisfies the established eligibility 

requirements and award criteria. 

34The Commission has not proposed to include 

eligibility criteria or award conditions in the 

assessment of an award program’s comparability to 

the Commission’s. This is because other authorities 

that are administering whistleblower programs may 

shape those programs through eligibility criteria 

and award conditions that reflect each agency’s 

own policy choices (or in some instances Congress’s 

policy choices), just as many of the Commission’s 

own eligibility criteria and award conditions reflect 

important policy considerations. But the 

Commission also recognizes that there could be 

some instances where the lack of comparability 

between the eligibility criteria and award 

conditions of the Commission’s whistleblower 

program and those of another agency’s 

whistleblower program could create an undue 

burden or significant hardship to the claimant. 

When these instances arise, the Commission could 

employ its discretionary waiver authority under 

Section 36(a) of the Exchange Act to include the 

related action within the scope of the Commission’s 

award program if the particular facts and 

circumstances warrant doing so. The flexibility that 

Section 36(a) provides seems particularly well 

suited in these instances given the myriad and 

varied competing interests that may be implicated. 

35The Commission has chosen to base the $5 

million threshold on the maximum potential award 

that the Commission could be required to pay, 

rather than rely on the monetary sanctions that have 

been collected and are likely to be collected in the 

future. Our experience demonstrates that we often 

do not have the same visibility into the likelihood 

of collecting an award in another agency’s action 

that we do in the context of our own SEC actions, 

particularly given that a determination would 

potentially be required prior to the exhaustion of 

the other agency’s collection efforts. Therefore, for 

purposes of administrative efficiency, we believe it 

is appropriate to use an objective reference point 

which will be available at the time the Commission 

is determining whether to grant a related-action 

award. 

36As proposed, a ‘‘comparable award program’’ 

would be a whistleblower award program 

administered by an authority or entity other than 

the SEC: (i) That ‘‘does not have an award range 

that could operate in a particular action to yield an 

award for a claimant that is meaningfully lower 

(when assessed against the maximum and 

minimum potential awards that program would 

allow) than the award range that the Commission’s 

program could yield (i.e., 10 to 30 percent of 

collected monetary sanctions)’’; (ii) that ‘‘does not 

have a cap that could operate in a particular action 

to yield an award for a claimant that is 

meaningfully lower than the maximum award the 

Commission could grant for the action (i.e., 30 

percent of collected monetary sanctions in the 

related action)’’; and (iii) in which the authority or 

entity administering the program does not have 

discretion to ‘‘deny an award notwithstanding the 

fact that a whistleblower otherwise satisfies the 

established eligibility requirements and award 

criteria.’’ 

from the Multiple-Recovery Rule.30

Specifically, under the Comparability 

Approach, the Multiple-Recovery Rule 

would not apply if the maximum 

potential award that the other program 

could grant in connection with a related 

action would be meaningfully lower 

than the maximum amount the 

Commission could award to that 

whistleblower on that same action.31 To 

implement this modification, the 

opening sentence of Rule 21F–3(b)(3) 

would be amended to provide that the 

rule does not apply unless the other 

whistleblower program is a ‘‘comparable 

whistleblower program.’’ 32

‘‘Comparable whistleblower program’’ 

would be defined in a new paragraph 

(b)(3)(iv)(A) of Rule 21F–3 to mean an 

award program that does not have an 

award range or award cap that would 

restrict the total maximum potential 

award from that program to an amount 

that is meaningfully lower than the 

maximum potential award to all eligible 

claimants (in dollar terms) that the 

Commission could make on the 

particular action.33 Taken together, 

these proposed amendments if adopted 

would mean that when the Commission 

determines that another award program 

fails to qualify as a ‘‘comparable award 

program,’’ Rule 21F–3(b)(3) would not 

apply and could not be used as a basis 

for denying an award on the potential 

related action.34

In addition, the Comparability 

Approach would provide that, after 

determining that the two programs are 

comparable, the Commission would 

deem a matter eligible for related-action 

status without regard to which program 

has the more direct and relevant 

connection to the action if the 

maximum award the Commission could 

have to pay in the related action would 

not exceed $5 million.35 This condition 

would be satisfied in any case where 30 

percent of the monetary sanctions 

ordered to be collected by the other 

agency is $5 million or less; if so, then 

the action would be eligible to qualify 

as a related action under the 

Commission’s program. Similar to what 

the Commission explained when in 

2020 it adopted the $5 million award 

presumption in Rule 21F–6(c), we 

believe that permitting an action to 

automatically qualify as a related action 

under these circumstances would help 

save whistleblowers time and effort, as 

well as Commission staff. 

Whistleblowers who must file an award 

application with another wholly 

unrelated program are likely to incur 

additional burdens in doing so, 

including familiarizing themselves with 

any potentially applicable rules. When 

the maximum award amount based on 

the monetary sanctions paid out in the 

action would not exceed $5 million, we 

think it is reasonable to allow the 

whistleblower to pursue any relatedaction claim with the Commission (via 

a process with which the whistleblower 

will be familiar given the 

whistleblower’s previous filing of a 

covered-action award). Additionally, 

because the Comparability Approach 

would require Commission resources to 

assess award comparability in each 

related-action claim that potentially 

implicates an alternative award 

program, the $5 million threshold 

would help promote the timely 

administration and efficiency of the 

award process. 

We do not think this $5 million 

threshold would impose an undue 

strain on the staff to process a relatedaction award to a final order, nor do we 

think it will pose risks to the solvency 

of the IPF. In order for a whistleblower 

to obtain the benefit of this new $5 

million threshold provision, however, 

the whistleblower will need to make an 

irrevocable waiver of any claim to an 

award from the other program and 

otherwise comply with the other 

procedural obligations that would be 

imposed by amended Rule 21F–3(b)(3). 

Below is a decision tree that outlines 

how the Commission would apply the 

Comparability Approach described 

above: 

Step 1. Determine whether another 

whistleblower program that might apply 

to a potential related (non-SEC) action 

for which a claimant is seeking an 

award. 

• If yes, continue to step 2. 

• If no, the matter would be treated as 

a potential related action and the 

Commission would process the 

claimant’s award application against the 

general award criteria and eligibility 

requirements of the whistleblower rules. 

Step 2. If there is another program 

that applies to the potential related 

action, determine whether it is a 

‘‘comparable award program.’’ 36

• If the other award program is 

comparable, proceed to step 3. 

• If the other program is not 

comparable, the matter would be treated 

as a potential related action and the 

Commission would process the 


jspears on DSK121TN23PROD with PROPOSALS1
9286 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

37 In addition to the changes discussed above, 

Rule 21F–3(b)(3)(iii) would be amended so that the 

existing reference to a ‘‘prompt, irrevocable waiver’’ 

specifies that the waiver must be made within 60 

calendar days of the claimant receiving notice of the 

Commission’s award determination. This change 

would ensure that the timing for an irrevocable 

waiver is consistent throughout Rule 21F–3(b)(3). 

Further, certain stylistic and clarifying 

modifications would be made to the existing three 

sentences of Rule 21F–3(b)(3)(iii), and each of these 

revised sentences would be broken out into new 

paragraphs (b)(3)(iii)(A) through (C). Finally, the 

Commission is proposing to revise the first sentence 

of Rule 21F–3(b)(3)(iii). In its current form, that 

sentence provides that the Commission will not 

issue an award determination for a potential related 

action if another program has already issued an 

award determination to the claimant based on that 

action. The Commission is proposing to replace that 

sentence with a new paragraph (b)(3)(iii)(A) that 

would provide that the Commission’s ability to 

discontinue processing a claimant’s related-action 

award application is triggered only by the 

claimant’s receipt of any payment from the other 

program. This modification would strike a better 

balance in terms of fairness to claimants because 

the receipt of a payment from the other program is 

an action that a claimant has control over, but a 

claimant often will have little control over the 

processing time for award applications. 

38See generally Section 21F(a)(6) of the Exchange 

Act (referring to ‘‘2 or more individuals acting 

jointly’’ to provide information to the Commission). 

39 Individuals who work jointly to provide the 

Commission with information are treated as a single 

unit for assessing eligibility requirements, applying 

the award criteria, and determining a specific award 

amount. Consistent with this approach, such 

individuals would have to determine jointly 

whether to proceed under the Commission’s 

program or the other program. 

claimant’s award application against the 

general award criteria and eligibility 

requirements of the whistleblower rules. 

Step 3. If the program is comparable, 

then determine whether either: (1) The 

absolute maximum payout the 

Commission could make on the 

potential related action is $5 million or 

less (i.e., 30 percent of the monetary 

sanctions ordered is $5 million or less); 

or (2) the SEC’s award program has the 

more direct or relevant connection to 

the action (relative to the other program) 

based on the facts and circumstances of 

the action. 

• If the answer to both (1) and (2) in 

step 3 is ‘‘no,’’ then the matter is not a 

related action. 

• If the answer to (1) and/or (2) in 

step 3 is ‘‘yes,’’ the matter would be 

treated as a potential related action and 

the Commission would process the 

claimant’s award application against the 

general award criteria and eligibility 

requirements of the whistleblower rules. 

Beyond the proposed changes 

discussed above, Rule 21F–3 would be 

revised to include a new paragraph 

(b)(3)(iv)(B) providing that the 

Commission will make a determination 

about comparability on a case-by-case 

basis. Further, a new paragraph 

(b)(3)(iv)(C) would be added to Rule 

21F–3 to state that if the Commission 

grants an award on a related-action 

application that involves an alternative 

program that is not comparable, the 

claimant must, within 60 calendar days 

of receiving notice of the award, make 

an irrevocable waiver of any claim to an 

award from the other program. 

Relatedly, a new paragraph 

(b)(3)(iv)(D) would be added to Rule 

21F–3 to afford the Commission robust 

authority to ensure that an irrevocable 

waiver has been made. New paragraph 

(3)(b)(iv)(D) would make clear that a 

claimant whose related-action award 

application is subject to the provisions 

of Rule 21F–3 has the affirmative 

obligation to demonstrate to the 

satisfaction of the Commission that the 

claimant has complied with the terms 

and conditions of the proposed rule 

regarding an irrevocable waiver. 

Proposed paragraph (b)(3)(iv)(D) would 

also amend Rule 21F–3 to provide that 

a claimant must take all steps necessary 

to authorize the administrators of the 

other award program to confirm to staff 

in the Office of the Whistleblower (or in 

writing to the claimant or the 

Commission) that an irrevocable waiver 

has been made. 

Further, a new paragraph (b)(3)(v) 

would be added to Rule 21F–3 to 

require a claimant to promptly notify 

the Office of the Whistleblower that 

they are seeking or have sought an 

award for a potential related action from 

another award program.37 And a 

paragraph (b)(3)(vi) would be added to 

advise claimants that the failure to 

comply with any of the conditions or 

requirements of an amended Rule 21F– 

3(b)(3) ‘‘may’’ result in the Commission 

deeming the claimant ineligible for the 

related action at issue. 

Finally, the Commission contemplates 

that the Comparability Approach would 

apply as follows in situations where two 

or more whistleblowers who were not 

acting jointly contributed to the success 

of a related action.38 If the Commission 

determined that the other agency’s 

award program was not comparable or 

that the maximum award payable would 

not exceed $5 million, each 

whistleblower would be able to 

determine separately whether to 

proceed under the Commission’s 

program or the other award program. 

Further, as is the case with all relatedaction claims involving multiple, 

independent whistleblowers, each 

claimant’s application would be 

assessed separately to determine 

whether the applicant qualifies for an 

award. And in determining the 

appropriate award amount for any 

meritorious whistleblower who has 

elected to proceed under our program, 

the award guidelines and considerations 

specified in 17 CFR 240.21F–5 (Rule 

21F–5) and Rule 21F–6 would be used. 

In making its award assessment for any 

whistleblower proceeding under the 

SEC’s program, the Commission may 

consider the relative contributions of 

any whistleblower who opted to 

proceed under the alternative 

whistleblower program rather than the 

Commission’s program. That said, in no 

event would the total award paid out on 

a related action to all the meritorious 

whistleblowers who proceed under the 

Commission’s program be less than 10 

percent or greater than 30 percent of the 

total monetary sanctions collected in the 

related action.39

2. Whistleblower’s Choice Option 

As an alternative to either 

maintaining Rule 21F–3(b)(3) in its 

current form or modifying it as 

described above (Comparability 

Approach), the Commission is 

requesting public comment on a third 

approach, the Whistleblower’s Choice 

Option. Under this option, the 

Commission would process an 

application for a related-action award 

without regard to whether a separate 

award program might also apply to that 

action and irrespective of the 

whistleblower’s decision to apply for an 

award from the other award program. 

Under the Whistleblower’s Choice 

Option, the Commission would process 

the related-action award application just 

as it does for related-action applications 

that do not implicate separate award 

programs. And if both the Commission 

and the other program grant an award, 

the Whistleblower’s Choice Option 

would allow the whistleblower to 

determine which award to accept. For 

example, if a whistleblower received 

separate award offers from the 

Commission and the Internal Revenue 

Service of the United States (‘‘IRS’’) on 

the same underlying action, the 

whistleblower would be able to consider 

both programs’ award offers and select 

the higher offer. 

A revised rule embodying the 

Whistleblower’s Choice Option would 

not permit the claimant to receive 

payment on both awards; the 

meritorious whistleblower would need 

to make a choice between the two 

awards. To ensure that the claimant 

would not receive payment on the same 

action from both programs, this 

proposed alternative would require that 

a claimant identify any award program 

other than the SEC’s to which the 

claimant had applied. Before receiving 

any payment from the Commission on a 

related-action award, the claimant 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9287 

40The Commission has previously articulated a 

view that a whistleblower should not have multiple 

bites at the adjudicatory apple. See, e.g., 83 FR 

34711; 76 FR 34305. 

41Processing claims for related-action awards 

generally takes longer than the processing of award 

claims for SEC covered actions. This is because 

Commission staff must often communicate with, 

and obtain information from, staff from the other 

agency to determine whether the claimant 

voluntarily provided new information that led to 

the other agency’s enforcement action in order to 

determine if the claimant is eligible for a relatedaction award. Commission staff must also obtain 

appropriate documentation from the other agency to 

confirm collections in the related action and 

prepare an accompanying declaration from a staff 

attorney memorializing for the record the relevant 

information regarding the related action. 

42Placing this affirmative obligation on claimants 

would help ensure that those subject to Rule 21F– 

3(b)(3) are adhering to the terms and requirements 

of the proposed rule. The proposed rule language 

to achieve this would be nearly identical to 

comparable language in the Comparative Approach 

detailed in Part II(A), supra. This rule text would 

provide that a claimant must take all steps 

necessary to authorize the administrators of the 

other award program to confirm to staff in the 

Office of the Whistleblower (or in writing to the 

claimant or the Commission) that an irrevocable 

waiver has been made. 

43See generally Section 21F(a)(6) of the Exchange 

Act (referring to ‘‘2 or more individuals acting 

jointly’’ to provide information to the Commission). 

would be required to irrevocably waive 

any award (or claim to an award) from 

the other program. 

The critical feature of the 

Whistleblower’s Choice Option is that— 

unlike Rule 21F–3(b)(3) in its current 

form or as modified to incorporate the 

Comparability Approach discussed 

above—the claimant, not the 

Commission, would decide which 

program should pay any award for a 

potential related action. The 

Commission would not account for the 

existence of another potentially 

applicable award program in its 

assessment of the claimant’s award 

eligibility or award offer. Rather, the 

Commission would consider the 

existence of the alternative award 

program only at the payment stage, 

when it would be required to determine 

that the whistleblower had irrevocably 

waived any and all rights to an award 

from the other program before making 

the related-action award payment. 

A potential benefit of the 

Whistleblower’s Choice Option is that 

the Commission and the staff would no 

longer be required to determine which 

award program has a more ‘‘direct or 

relevant’’ connection to the related 

action. Such determination can entail 

difficult assessments, the resolution of 

which can increase overall award 

processing time. 

There are countervailing 

considerations that—at least 

preliminarily—may militate in favor of 

the Comparability Approach. First, 

under the Whistleblower’s Choice 

Option, whistleblowers who apply to 

both programs would get two separate 

opportunities to demonstrate that they 

should receive an award.40 This could 

produce a situation in which the 

Commission and another agency made 

conflicting factual determinations after 

reviewing the same related action. 

Separately, irrespective of whether 

another whistleblower award program 

has a more direct or relevant connection 

to a matter upon which a whistleblower 

is seeking a related-action award, a 

whistleblower could attempt to use the 

Commission’s Whistleblower Program 

to overcome or avoid the failure to 

satisfy a significant eligibility 

requirement imposed by the other 

program. 

Second, the Whistleblower’s Choice 

Option could slow the overall 

processing of award claims given the 

limited staff resources and the 

likelihood that this approach would 

increase the staff’s administrative 

workload.41 Unlike either existing Rule 

21F–3(b)(3) or the approach 

contemplated by the Comparability 

Approach, the Whistleblower’s Choice 

Option could require the Commission to 

fully process every application for a 

related-action award that also implicates 

a second award program. Under Rule 

21F–3(b)(3)’s existing framework, by 

contrast, the staff is not required to work 

with officials at the authority or entity 

that handled the underlying action to 

develop an administrative record 

regarding the claimant’s contributions to 

the other action. Rather, under the 

existing framework, the Commission 

first analyzes the relative relationship of 

each award program to the underlying 

action and, if it determines that the 

Commission’s award program lacks the 

more direct or relevant connection to 

the action, it issues a final order on this 

ground. This approach avoids the more 

time consuming and challenging work 

often involved with understanding the 

whistleblower’s contribution to the 

potential related action and assessing 

whether the various conditions for an 

award have been satisfied. But if the 

Whistleblower’s Choice Option were 

adopted to replace the current 

framework, it would displace the 

threshold ‘‘direct or relevant’’ inquiry 

and the staff would generally process 

each related-action application on the 

merits of the whistleblower’s claim to 

an award. 

To implement the Whistleblower’s 

Choice Option, the current version of 

Rule 21F–3(b)(3) would be repealed in 

its entirety and replaced by a new Rule 

21F–3(b)(3) that would specify the 

‘‘terms and conditions’’ that would 

apply whenever at least one other award 

program potentially applied to an 

action. Paragraph (b)(3)(i) of the revised 

rule would provide that if the 

Commission determines that a claimant 

qualifies for an award for the related 

action, any payment of that award by 

the Commission would be conditioned 

on that claimant making an irrevocable 

waiver of any award or potential award 

from the other program. Paragraph 

(b)(3)(i) would also prohibit the 

Commission from considering the 

existence of the alternative program or 

the amount of that program’s award (if 

one has already been issued) in its own 

consideration of the claimant’s right to 

a related-action award or its 

determination about the proper amount 

of any award. Paragraph (b)(3)(ii) would 

provide that the Commission will not 

make an award on a related action (or 

pay on an award if one has already been 

issued), if the claimant receives any 

payment from the other award program. 

Paragraph (b)(3)(iii) would require that 

the claimant make an irrevocable waiver 

of any award from the other program 

within 60 calendar days of the later of 

either a claimant learning of the 

Commission’s award amount or a 

claimant learning of the other program’s 

award offer. Further, new paragraph 

(b)(3)(iv) of Proposed Rule 21F–3(b)(3) 

would provide that a claimant must 

comply with the irrevocable-waiver 

requirement of paragraph (b)(3)(i) of the 

proposed revised rule.42 A proposed 

paragraph (b)(3)(v) of a revised Rule 

21F–3(b)(3) would impose an 

affirmative obligation on a claimant 

seeking a related-action award to 

promptly notify the Office of the 

Whistleblower if that claimant was 

seeking an award on that same action 

from another agency. A proposed 

paragraph (b)(3)(vi) would be added to 

advise claimants that the failure to 

comply with any of the conditions or 

requirements of an amended Rule 21F– 

3(b)(3) may result in the Commission 

deeming the claimant ineligible for the 

related-action at issue. 

Finally, the Commission contemplates 

that the Whistleblower’s Choice 

Approach would apply as follows in 

situations where two or more 

whistleblowers who were not acting 

jointly contributed to the success of a 

related action and subsequently filed 

award applications with the 

Commission.43 As is the case with all 

related-action claims involving 

multiple, independent whistleblowers, 

each claimant’s application will be 

assessed independently of any other’s to 

determine whether the claimant 


jspears on DSK121TN23PROD with PROPOSALS1
9288 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

44 Individuals who work jointly to provide the 

Commission with information are treated as a single 

unit for assessing eligibility requirements, applying 

the award criteria, and determining a specific award 

amount. Consistent with this approach, under the 

Whistleblower’s Choice Option, such individuals 

would have to determine jointly whether to accept 

an award from the Commission or to waive the 

Commission’s award determination in favor of the 

other program’s award determination. 

45A decision by one whistleblower to reject an 

SEC award offer would not impact the award 

amount offered or paid to any other whistleblowers. 

The award amounts offered to each whistleblower 

would not depend on whether any of the 

whistleblowers opted to decline the Commission’s 

award offer. This means, among other things, that 

the 30-percent presumption established by Rule 

21F–6(c) would not be applied to revise a 

whistleblower award upward as a result of another 

whistleblower’s determination to decline an award 

from the Commission’s program. Proceeding in this 

way is consistent with the provision of the 

proposed rule that states the ‘‘Commission shall 

proceed to process the application without regard 

to the existence of the alternative award program,’’ 

which includes any decisions the another 

whistleblower makes about taking an award offered 

by that other program in lieu of an award offered 

by the Commission’s program. 

46Similar to the Whistleblower’s Choice Option, 

these alternatives would begin with the 

Commission determining its award percentage 

applicable to the related action, and would proceed 

if an award from another program was lower than 

what would have been awarded by the Commission 

on the related action had the other program not 

existed. 

47The effect on the IPF from the ‘‘Offset 

Approach’’ would be difficult to assess with any 

confidence. Relative to the Comparability 

Approach, the Offset Approach could potentially 

increase the money paid from the IPF in some cases 

if a comparable program were to produce a 

meaningfully smaller than expected award and, as 

a result, an offset payment. However, in other 

instances, the Offset Approach could reduce the 

burden on the IPF, because the Commission would 

potentially be sharing responsibility with another 

award program for that related action. 

48Pursuant to Exchange Act Section 21F(b), the 

Commission shall pay an award to one or more 

meritorious whistleblowers of ‘‘not less than 10 

percent, in total, of what has been collected of the 

monetary sanctions imposed in the [Commission’s] 

action or related actions[.]’’ Under the Offset 

Approach, it is possible that the Commission’s 

portion of the award payment could place the 

Commission in the position of making a relatedaction award that is less than 10 percent of the total 

amount collected. Alternatively, it could also result 

in a total reward to the claimant (when combined 

with the payment from the other program) that 

exceeds 30 percent. As an illustration, if another 

program makes a 22 percent award on a related 

action, and if the Commission determines to 

provide an additional reward on top of the amount 

the other program will pay, then the Commission 

would be presented with the following dilemma: If 

the Commission’s award is 8 percent or less, there 

would appear to be a conflict with Section 21F’s 10 

percent statutory minimum. But if the Commission 

makes an award greater than 8 percent, the total 

payout would exceed the 30 percent statutory cap. 

For these reasons, the Commission has not 

designated the Offset Approach as one of the 

principal approaches under consideration. 

qualifies for an award. Assuming there 

are two or more meritorious 

whistleblowers, the Commission would, 

consistent with its general practice, 

include within its award determinations 

consideration of each whistleblower’s 

relative contributions to the success of 

the related action (with the total award 

no lower than 10 percent and no greater 

than 30 percent of monetary sanctions 

collected in the related action). Each 

whistleblower would then be able to 

determine whether to accept the 

Commission’s award determination or 

instead waive the award determination 

and take an award from the other 

program.44 Thus, for example, if the 

Commission made an award of 10 

percent to one whistleblower and 20 

percent to another, if the first 

whistleblower waived the SEC’s award 

and accepted an award from the other 

program, the second would be free to 

accept the SEC’s 20 percent award.45

3. Other Alternatives 

In addition to the Comparability 

Approach and the Whistleblower’s 

Choice Option, there are two other 

potential alternative approaches on 

which the Commission seeks comment: 

The Offset Approach; and, the ToppingOff Approach. Both would involve 

replacing the Multiple-Recovery Rule. 

Under both of these two approaches, a 

whistleblower would be permitted to 

receive a payment from both the 

Commission’s program and another 

entity’s whistleblower program; the 

Commission would not require 

whistleblowers to waive their claims to 

awards from another program as a precondition to recovering under the 

Commission’s program.46 As discussed 

below, both raise potential 

administrative issues that might counsel 

against their adoption. 

Under the Offset Approach, the 

Commission would determine the 

award percentage it would otherwise 

pay on the related action but would 

offset from the Commission’s total 

award payment the dollar amount the 

whistleblower receives for the related 

action from the other program’s 

award.47 Put differently, the Offset 

Approach would require the 

Commission to make a related-action 

award even if another agency had 

already paid an award on that same 

action, but the Commission could 

reduce the amount it paid on its relatedaction award by the amount that the 

other agency paid. The fact that the 

whistleblower might receive an award 

from another program would have no 

bearing on the Commission’s actual 

award determination; it would be 

relevant only when the Commission 

offset the award amount at the time of 

payment.48

Under the Topping-Off Approach, the 

current Rule 21F–3(b)(3) framework 

would be retained but the Commission 

would be granted the discretion to 

enhance or ‘‘top off’’ a covered-action 

award—that is, increase the award 

amount on the Commission’s own 

covered action (up to a total award 

amount of 30 percent)—if the 

Commission concluded that the other 

whistleblower program’s award for the 

non-SEC action was inadequate for any 

reason. A potential concern with this 

approach is that, as a practical matter, 

the Commission’s ability to enhance or 

‘‘top off’’ a covered-action award to 

provide a whistleblower relief from a 

deficient award issued by another 

program for a non-SEC action would be 

limited in many instances. For example, 

when the covered-action award already 

(i.e., prior to any enhancement to 

account for a deficient award from the 

other program for the non-SEC action) is 

at or near the statutory maximum 30 

percent award authorized under Section 

21F(b), the Commission would not have 

the ability to grant a significant 

percentage enhancement. Similarly, if 

the monetary sanctions collected in the 

Commission’s action are relatively small 

compared to the size of the related 

action’s collected sanctions (e.g., a 

relatively small covered action 

involving $10 million in collected 

sanctions versus a much larger non-SEC 

action involving $100 million in 

collected sanctions), then the 

Commission’s ability to provide relief 

by topping off the covered action may 

be limited because of the sheer size of 

the related-action relative to the 

Commission’s action. 

Finally, both of these alternatives 

raise the concern that they would add 

significant delays to the Commission’s 

ability to make timely award 

determinations whenever an action 

implicates another award program. This 

is because (unlike the Comparability 

Approach or the Whistleblower’s Choice 

Option) the Offset Approach and the 

Topping-Off Approach would delay the 

Commission’s ability to pay the final 

award amount to a meritorious 

whistleblower until after the other 

entity’s award process has been 

completed. 

Request for Comment 

1. Do any of the approaches discussed 

above implicate additional 

considerations that the Commission has 

not addressed in this proposing release 

but that you believe should be factored 

into the Commission’s deliberations 

relating to potential amendments to 

Rule 21F–3(b)(3)? For example, should 

the proposals identify the potential 

consequences that might result if a 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9289 

49The 2011 adopting release explained that False 

Claims Act qui-tam suits are legally excluded from 

a related-action recovery under the Commission’s 

whistleblower program. See 76 FR 34305. This 

interpretation remains in effect and is not a subject 

of this proposing release or otherwise opened for 

reconsideration as part of this ongoing rulemaking 

process. Id. 

50See Letter from Kohn, Kohn & Colapinto, LLP, 

Comment offered in connection with Proposing 

Release No. 34–83557 regarding Related Actions 

and Proposed Rule 21F–3(b)(4) (Sept. 10, 2020) 

(recommending that the Commission expand the 

2011 version of Rule 21F–3(b)(3) that ‘‘prohibit[ed] 

double awards under the [Commodity Exchange 

Act] to include other similar whistleblower reward 

laws’’). 

51See supra note 34 (explaining the 

Commission’s rationale for not including eligibility 

criteria and award conditions in the assessment of 

the other award program’s comparability). 

52See, e.g., Section 21F(h)(2) (heightened 

confidentiality protections); Exchange Act Rule 

21F–7, 17 CFR 240.21F–7 (confidentiality and 

anonymity protections). 

claimant fails to comply with the 

requirements of any amended rule? 

2. The Commission outlines above 

how it contemplates dealing with 

instances involving multiple 

whistleblowers under the Comparability 

Approach and the Whistleblower’s 

Choice Option. If the Comparability 

Approach is adopted, is the 

Commission’s proposed approach for 

addressing awards in the context of 

related actions involving multiple 

whistleblowers appropriate? Similarly, 

if the Whistleblower’s Choice Option is 

adopted, is the Commission’s proposed 

approach for addressing awards in the 

context of related actions involving 

multiple whistleblowers appropriate? 

Please explain. Should the Commission 

consider alternative approaches for 

dealing with related actions involving 

multiple whistleblowers under the 

Comparability Approach and 

Whistleblower’s Choice Approach? 

Please explain and identify any 

alternatives that you believe the 

Commission should consider. 

3. Is the $5 million threshold 

proposed as part of the Comparability 

Approach the appropriate figure? 

Should the threshold be higher or 

lower? Please explain. 

4. The initial set of whistleblower 

program rules adopted in May 2011 

included a now-repealed version of Rule 

21F–3(b)(3) that dealt only with the 

potential that a claimant could receive 

awards for the same related action from 

the Commission and the Commodity 

Futures Trading Commission (‘‘CFTC’’), 

whose new whistleblower program, like 

the SEC’s, was authorized by the DoddFrank Act and includes a related-action 

supplemental component. Under that 

original version of Rule 21F–3(b)(3), the 

Commission stated that it would not pay 

an award on a related action if the CFTC 

had already made an award on that 

action, nor would the Commission 

allow the whistleblower to re-adjudicate 

any factual issues decided against the 

whistleblower as part of the CFTC’s 

final order denying an award.49 Should 

the Commission reconsider this original 

version of Rule 21F–3(b)(3) instead of 

adopting one of the alternative options 

proposed in this release? If so, please 

explain why and what revisions to the 

original version might be appropriate.50

5. Proposed Rule 21F–3(b)(3)(iii)(A) 

directs that the Commission shall not 

make a related-action award to a 

claimant (or any payment on a relatedaction award if the Commission has 

already made an award determination) 

if the claimant has already received any 

payment from the other program for that 

potential related action. Rather than cut 

off the potential for an award payment 

from the SEC in this situation, should 

the Commission consider adopting in 

this limited situation some form of an 

offset mechanism similar to the Offset 

Approach discussed above? Please 

explain. 

6. Instead of the current Rule 21F– 

3(b)(3) and the alternatives discussed 

above (including the alternative 

referenced in the prior question and the 

alternatives discussed in Part II(A)(3)), 

should the Commission consider a 

different approach, such as: (i) Leaving 

the text of Rule 21F–3(b)(3) unchanged; 

or (ii) adopting a hybrid approach that 

would implement the Whistleblower’s 

Choice option below a maximum 

potential award threshold, and above 

that threshold retain the current Rule 

21F–3(b)(3) framework that considers 

which program has the more direct or 

relevant connection to the action? 

Please identify the alternative approach 

that you support, explain why you 

believe that approach should be 

adopted, and explain how the specific 

approach you support should work. 

7. As described above, the 

Comparability Approach would apply 

in any situation where another award 

program (were it to apply) has an award 

range or an award cap that would yield 

an award ‘‘meaningfully’’ lower than the 

amount the Commission’s program 

would likely offer (but above a $5 

million maximum award that might be 

paid by the Commission). As discussed, 

the Comparability Approach would also 

apply where awards under another 

award program are discretionary rather 

than mandatory. In assessing whether 

an award from another award program 

(greater than the $5 million threshold) 

would be ‘‘meaningfully lower’’ than 

the maximum amount that might be 

awarded under the Commission’s award 

program, should the Commission 

establish a fixed dollar or percentage 

difference as an alternative to the 

‘‘meaningfulness’’ standard? If so, 

please explain why a uniformly applied 

fixed dollar or percentage amount 

would be better. If possible, please also 

identify the dollar or percentage amount 

of the potential difference that the 

Commission should use to determine 

that the other program’s award is not 

meaningfully lower, and please explain 

why that dollar or percentage amount is 

appropriate. 

8. If the Comparability Approach is 

adopted, should the Commission also 

incorporate eligibility and award 

conditions into the definition of 

‘‘comparable whistleblower 

program’’?51 For example, should 

comparability include consideration of 

the absence of robust confidentiality 

protections or anonymity provisions 

similar to those under which the 

Commission’s whistleblower program 

operates?52 Are there other factors that 

the Commission should take into 

account to determine if another 

whistleblower program is comparable to 

the Commission’s award program? With 

respect to the foregoing, if you believe 

that additional factors should be added 

to assess a program’s comparability, 

please identify those factors and explain 

why they should be considered in 

determining whether another award 

program is comparable. 

9. Both the Comparability Approach 

and the Whistleblower’s Choice Option 

would require that a claimant 

irrevocably waive and promptly forgo 

an award from the other potentially 

relevant award program. Should the 

Commission take additional steps to 

ensure that claimants are put on notice 

of the potential consequences of falsely 

representing that they have waived an 

award from the alternative program? If 

so, please explain why this is uniquely 

important in this context and what 

approach the Commission should take 

(such as, for example, requiring 

claimants to explicitly acknowledge that 

providing false information to the 

Commission could constitute a violation 

of Section 1001 of Title 18 of the United 

States Code (and any other applicable 

provisions))? 

10. Are the time limits imposed by the 

Comparability Approach and 

Whistleblower’s Choice Option 

appropriate? Should these time periods 

be longer or shorter and, if so, what 

would be appropriate time periods? 

Please explain. 


jspears on DSK121TN23PROD with PROPOSALS1
9290 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

53 In deciding whether to increase the amount of 

an award, Rule 21F–6(a) identifies the following 

relevant considerations: (1) ‘‘The significance of the 

information provided by a whistleblower to the 

success of the Commission action or related 

action’’; (2) ‘‘the degree of assistance provided by 

the whistleblower and any legal representative of 

the whistleblower in the Commission action or 

related action’’; and (3) the ‘‘programmatic interest 

in deterring violations of the securities laws by 

making awards to whistleblowers who provide 

information that leads to the successful 

enforcement’’ of the securities laws. And in 

deciding whether to decrease the amount of an 

award, Rule 21F–6(b) permits the Commission to 

consider: (1) The ‘‘culpability or involvement of the 

whistleblower in matters associated’’ with the 

covered action or related action; (2) ‘‘whether the 

whistleblower unreasonably delayed in reporting 

the suspected securities violations’’; and (3) ‘‘in 

cases where the whistleblower interacted with his 

or her entity’s internal compliance or reporting 

system, whether the whistleblower undermined the 

integrity of such system.’’ 

54See Rule 21F–6 (‘‘In exercising its discretion to 

determine the appropriate award, the Commission 

may consider the following factors (and only the 

following factors) in relation to the facts and 

circumstances of each case in setting the dollar or 

percentage amount of the award.’’). The 2020 

Amendments explicitly acknowledge the 

Commission’s discretion to consider the dollar 

amount of a potential award when applying the 

award factors specified in paragraphs (a) and (b) of 

Rule 21F–6. See, e.g., Adopting Release, 85 FR 

70909–10 (‘‘The Commission has had and continues 

to have broad discretion in applying the Award 

Factors and setting the Award Amount, including 

the discretion to consider and apply the Award 

Factors in percentage terms, dollar terms or some 

combination thereof.’’); id. at n.102 (‘‘When 

applying the award factors specified in Rule 21F– 

6 and determining the award dollar and percentage 

amounts set forth in the preliminary determination, 

the award factors may be considered by the SEC 

staff and the Commission in dollar terms, 

percentage terms or some combination thereof.’’). 

55The Commission has previously explained that 

the statutory framework that Section 21F 

establishes can be read to allow the Commission to 

consider the dollar amount of a potential award. 

Proposing Release, 83 FR 34714 n.105. Indeed, the 

language in Section 21F refers to the ‘‘amount of the 

award,’’ which affords the Commission discretion 

to set the awards based on a consideration of the 

appropriate dollar amount that should be paid 

(provided that this dollar amount is between 10 

percent and 30 percent of the collected monetary 

sanctions). Id. 

56 If Rule 21F–3(b)(3) were amended to adopt the 

Offset Approach or Topping-Off Approach 

discussed above in Part II(A)(3), the Commission, 

when applying either of those approaches, may 

need to consider the dollar amount of awards, and 

thus the Commission anticipates that any amended 

Rule 21F–3(b)(3) adopting either of those 

approaches might require a corresponding 

amendment to Rule 21F–6(d). 

57The Commission is also proposing to modify 

Rule 21F–10(e) and Rule 21F–11(e) to make clear 

that, in applying the award factors specified in Rule 

21F–6 and determining the award dollar and 

percentage amounts set forth in the preliminary 

determination, the award factors may be considered 

by the SEC staff and the Commission in dollar terms 

‘‘subject to the limitations imposed by Rule 21F– 

6(d).’’ The Commission is also proposing to revise 

the text of Rule 21F–11(a) to improve its readability 

and clarity (with no substantive modification of the 

provision). 

58As the Commission explained in the 2020 

Adopting Release, ‘‘the Commission’s long-standing 

interpretation of Rule 21F6(a)(3)—law enforcement 

interest—already specifically references the 

Commission’s discretion to consider the monetary 

sanctions and the potential Award Amount when 

assessing that factor[.]’’ See 85 FR 70910. See also 

83 FR 34712; 76 FR 34331, 34366. Rule 21F–6(a)(3) 

allows the Commission to consider the degree to 

which a potential award will ‘‘enhance[ ] the 

Commission’s ability to enforce the federal 

securities laws and protect[ ] investors’’ and 

‘‘encourage[ ] the submission of high quality 

information from whistleblowers by appropriately 

rewarding’’ them. Rule 21F–6(a)(3)(i)–(ii). 

59And since that time, the Commission has 

granted some of the highest awards in the program’s 

history, including two awards at or above $110 

million, without any suggestion that the award 

should be, or was being, lowered as a result of its 

dollar size. See Press Release, 2021–177, SEC 

Surpasses $1 Billion in Awards to Whistleblowers 

with Two Awards Totaling $114 Million (Sept. 15, 

2021), available at https://www.sec.gov/news/pressrelease/2021-177 (‘‘[W]histleblower’s $110 million 

award consists of an approximately $40 million 

award in connection with an SEC case and an 

approximately $70 million award arising out of 

related actions by another agency’’); Press Release, 

SEC Issues Record $114 Million Whistleblower 

Award (Oct. 22, 2020), available at https://

www.sec.gov/news/press-release/2020-266 (‘‘The 

$114 million award consists of an approximately 

$52 million award in connection with the SEC case 

and an approximately $62 million award arising out 

of the related actions by another agency.’’). 

60The Commission’s whistleblower program was 

enacted to incentivize individuals to submit tips to 

the Commission with the ultimate goal of more 

effectively and efficiently detecting, preventing, and 

addressing securities law violations. This goal is 

evident in the title of the statutory provision. See 

Securities Whistleblower Incentives and Protection, 

15 U.S.C. 78u–6 (emphasis added). Moreover, 

Section 21F(c)(1)(B)(i)(III) of the Exchange Act 

requires the Commission to take ‘‘the programmatic 

interest in deterring violations of the securities laws 

by making awards to whistleblowers who provide 

information that leads to the successful 

enforcement of such laws.’’ See also Rule 21F– 

6(a)(3) (restating the ‘‘programmatic interest’’ award 

factor). 

61See Whistleblower Awards Process and 

Statistics, available at https://www.sec.gov/page/ 

whistleblower-100 million. 

B. Proposed Amendment To Exchange 

Act Rule 21F–6 Regarding Size of Award 

Rule 21F–6 identifies the criteria that 

the Commission may consider when 

determining the amount of an award.53

The 2020 Amendments added language 

to Rule 21F–6 clarifying that it was 

within the Commission’s discretion to 

consider the dollar amount of an award 

when making an award determination.54

Before this amendment, the rule (with 

one exception, see infra footnote 58 and 

accompanying text) referred to the 

Commission making award 

determinations by considering 

percentage adjustments to increase and 

decrease the award amount, and neither 

unambiguously provided that the 

Commission could consider dollar 

amounts nor prohibited it from doing so 

when assessing the various award 

factors.55

The Commission proposes a targeted 

revision to further clarify how it may 

use its discretion to consider the dollar 

amount of a potential award when 

applying the award factors specified in 

paragraphs (a) and (b) of Rule 21F–6. 

Specifically, the Commission is 

proposing a new paragraph (d) for Rule 

21F–6 that would do two things. First, 

it would provide that the Commission 

‘‘shall not’’ use the dollar amount of a 

potential award when applying the 

factors specified in paragraphs (a) and 

(b), or in any other way, to lower a 

potential award.56 Second, new 

paragraph (d) would provide that the 

Commission may consider the dollar 

amount of a potential award for the 

limited purpose of increasing the award 

amount.57 Several factors counsel in 

favor of this proposal. 

First, the SEC’s ongoing experience 

with whistleblower awards has 

demonstrated that the discretionary 

authority to decrease awards based on 

potential dollar size is unnecessary. In 

the history of the Commission’s 

whistleblower program, to the extent 

that the Commission has considered the 

dollar amount of an award as part of the 

award analysis under Rule 21F–6, the 

Commission has generally done so to 

increase the amount of an award in 

connection with applying the ‘‘law 

enforcement interest’’ factor in Rule 

21F–6(a)(3).58 By contrast, the 

Commission has not considered the 

dollar amount to lower any awards 

since the rule was amended.59

Second, it has been the Commission’s 

experience that large awards in 

particular generate public interest and 

in so doing increases the instances of 

whistleblowers coming forward to 

report securities-law violations.60 In this 

way, large awards directly serve the 

purpose of the whistleblower program 

(and by extension the interests of the 

investing public) by incentivizing 

whistleblowers to report violations to 

the Commission.61

Third, the Commission is concerned 

that discretionary authority to consider 

the dollar amount of potential awards 

clarified in the 2020 Amendments could 

create uncertainty about, and thereby 

decrease confidence in, the award 

process itself. The Commission’s 

internal award-review process is 

thorough and robust. For example, 

award recommendations to the 

Commission are based on the collective 

views of the members of the 

Commission’s Office of the 

Whistleblower and Claims Review Staff 

(which has historically been composed 

of senior career staff members in the 

Division of Enforcement), and those 

recommendations are separately 

reviewed by Enforcement’s Office of 

Chief Counsel and the Commission’s 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9291 

62See 21F(h)(2) of the Exchange Act, 15 U.S.C. 

78u–6(h)(2) (imposing heightened confidentiality 

requirements in order to protect the identity of 

whistleblowers). Id. The SEC is required to keep a 

whistleblower’s identity confidential unless and 

until it is required to be disclosed to a defendant 

in a public proceeding or unless the SEC deems it 

necessary to share it with certain other authorities 

(in which case those authorities must keep it 

confidential). Id. 

63The Commission’s long-standing general 

practice in public whistleblower award orders is to 

describe awards in actual dollar amount, rather 

than percentages (which are generally redacted). 

Adopting Release, 85 FR 70910. This practice has 

been followed for the common-sense reason that 

actual dollar figures—not abstract percentages—are 

most likely to advance the whistleblower award 

program’s goal of incentivizing potential 

whistleblowers. Id. 

64 In reality, both the size and frequency of 

awards have increased since the 2020 Amendments. 

See supra note 59 and accompanying text (noting 

that, since the 2020 Amendments, the Commission 

has granted some of the highest awards in the 

program’s history, including two awards at or above 

$110 million, without any suggestion that the award 

should be, or was being, lowered as a result of its 

dollar size). In 2020, the program awarded 

approximately $175 million to 39 individuals—at 

that time both the highest dollar amount and the 

highest number of individuals awarded in a given 

fiscal year in the program’s history—triple the 

number of individuals awarded in 2018, the nexthighest fiscal year, when the Commission awarded 

13 individuals. See SEC 2020 Report on 

Whistleblower Program at 2, available at https:// 

www.sec.gov/files/2020AnnualReport_0.pdf. 

Likewise, in 2020, the Commission received a 31 

percent increase in tips from 2018, the secondhighest tip year. Id. This trend continued—and 

accelerated—through 2021. Indeed, the Commission 

made more whistleblower awards in 2021 than in 

all prior years combined, awarding approximately 

$564 million to 108 individuals. See SEC 2021 

Report on Whistleblower Program at 1, 10, available 

at https://www.sec.gov/files/owb-2021-annualreport.pdf. 

65The proposed amendment would permit the 

Commission to increase the dollar amount of an 

award when considering any of the positive award 

factors in Rule 21F–6(a). This authority does not 

impact, and in fact is separate and distinct from, the 

maximum-award presumption that Rule 21F–6(c) 

establishes. See Adopting Release, 85 FR 70899 

(‘‘[W]ith a focus on increased transparency, 

efficiency and clarity, we are adding a specific 

provision to Rule 21F–6 that will create a 

presumption that, when (1) the statutory maximum 

authorized Award Amount is $5 million or less and 

(2) the negative Award Factors are not present, the 

Award Amount will be set at the statutory 

maximum, subject to the Commission’s discretion 

to apply certain exclusions.’’). 

66The Commission is not reopening any aspect of 

Rule 21F–4(c) or Rule 21F–8(c) for public comment 

on other potential revisions, including potential 

substantive revisions, beyond the technical 

revisions proposed herein. 

67See 76 FR 34365. See also id. at 34357 n.438. 

68See Adopting Release, 85 FR 70920–22. 

69See id. at 70920. 

70See id. at 70921–22. 

71The discussion in the adopting release for the 

2020 Amendments is silent about this sentence, 

further indicating that it was a scrivener’s error. See 

id. 

Office of the General Counsel before 

they are submitted to the Commission. 

But in order to ensure whistleblowers 

feel safe providing information to the 

Commission, and because the 

Commission must comply with 

statutory confidentiality protections to 

avoid disclosing the identity of 

whistleblowers, it does not discuss the 

details of how that award-review 

process produces final award 

determinations in individual cases.62

Indeed, publicly available award 

determination orders often affirm that 

the Commission considered the Rule 

21F–6 criteria without flagging specific 

factual considerations or award factors 

on which the Commission relied, or 

revealing the actual percentage awarded 

(instead, the award is generally 

presented as a dollar figure).63

Because public information regarding 

how the Commission applies award 

factors in practice is limited, the 

Commission perceives a risk that merely 

maintaining the authority to lower 

awards based on the dollar amount of 

the award may create the misimpression 

that the Commission is regularly 

exercising such authority—and this 

could in turn potentially deter 

individuals from reporting 

misconduct.64 The proposed 

amendment should foreclose that risk 

by expressly stating that the 

Commission may not consider the dollar 

amount of an award for the purpose of 

potentially lowering the award 

amount.65

Request for Comment 

11. Are there additional 

considerations that the Commission 

should assess in deciding whether to 

adopt any changes to Rule 21F–6, 

including proposed Rule 21F–6(d)? 

12. Are there other or different 

revisions to Rule 21F–6 that the 

Commission should consider to clarify 

that the Commission will not lower an 

award based on the potential dollar 

amount of the award? For example, 

should the Commission consider 

removing the reference to ‘‘dollar . . . 

amount of the award’’ entirely from the 

introductory paragraph of Rule 21F–6? 

Please explain why this approach or any 

other alternative approach should be 

adopted and explain how the specific 

approach recommended would work. 

13. Instead of completely eliminating 

the Commission’s ability to consider the 

dollar amount of an award when 

assessing whether to lower a potential 

award, should the Commission retain 

this authority for a subset of awards 

(e.g., for related-action awards, given 

that they are an ancillary component of 

the program, or for awards where the 

whistleblower engaged in culpable 

conduct or obstructed the Commission’s 

process in some fashion)? Please 

identify the approach that you would 

follow and explain the basis for your 

recommendation if it differs from the 

approach the Commission has proposed. 

C. Proposed Technical Amendments To 

Rule 21F–4(c) and Rule 21F–8(e) 66

Rule 21F–4(c) was adopted by the 

Commission in 2011 as part of the 

original set of whistleblower program 

rules to list the three ways a 

whistleblower’s information can have 

‘‘led to’’ the success of an action.67

There is a scrivener’s error at the end of 

Rule 21F–4(c)(2) that the Commission is 

proposing to correct to enhance the 

readability and grammatical consistency 

of Rule 21F–4(c). Specifically, the 

Commission would insert a semicolon 

and the word ‘‘or’’ at the end of Rule 

21F–4(c)(2) to replace the period that is 

currently there. 

Rule 21F–8(e) was adopted by the 

Commission in the 2020 whistleblower 

rule amendments to authorize a 

permanent bar against any individual 

who submits three or more award 

applications that are frivolous or lack a 

colorable connection between the tip 

and the action.68 In this context, 

paragraph (e)(3) provides a 

whistleblower with notice and an 

opportunity to withdraw up to three 

such award applications, which, if 

withdrawn, would not be considered by 

the Commission in determining whether 

to exercise its authority to impose such 

a permanent bar.69 Moreover, paragraph 

(e)(4) provides a whistleblower with 

notice and an opportunity to withdraw 

all such frivolous or noncolorable award 

applications that were filed before the 

effective date of the new permanent bar 

provisions.70

As adopted in 2020, the second 

sentence of Rule 21F–8(e)(4)(ii) states 

that the procedures in Rule 21F–8(e)(3) 

shall apply to any award application 

that is pending as of the effective date 

of the rule and that is determined to be 

a frivolous or noncolorable application. 

The sentence was in error, as paragraphs 

(e)(3)(i) through (iii) affords claimants 

notice and an opportunity to withdraw 

only three applications, whereas 

paragraph (e)(4) by its terms applies ‘‘to 

all award applications pending as of the 

effective date of paragraph (e) of this 

section’’ and affords claimants notice 

and an opportunity to withdraw all such 

pending award applications.71 Given 

this scrivener’s error, the Commission is 

proposing a technical amendment to 

delete the second sentence of Rule 21F– 

8(e)(4)(ii). 


jspears on DSK121TN23PROD with PROPOSALS1
9292 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

72See Proposing Release, 83 FR 34734. 

73 15 U.S.C. 78w(a)(2). 

74 15 U.S.C. 78c(f). 

75Earlier this year, the Commission issued a 

statement identifying procedures that could be used 

by whistleblower award program during an Interim 

Policy-Review Period. Release No. 34–81207 (Aug. 

5, 2021), available at https://www.sec.gov/rules/ 

policy/2021/34-92565.pdf. These procedures are 

considered in the economic baseline. 

76 In fiscal year (FY) 2021, the Commission 

awarded approximately $564 million to 108 

individuals—both the largest dollar amount and the 

largest number of individuals awarded in a single 

fiscal year. The program was also very active in FY 

2020, awarding approximately $175 million to 39 

individuals. See supra note 59. 

77See SEC 2020 Report on Whistleblower 

Program, at 9–16; U.S. Sec. & Exch. Comm’n, Div. 

of Enf. 2020 Ann. Rep., pp. 9–16 (November 2, 

2020), available at https://www.sec.gov/files/ 

enforcement-annual-report-2020.pdf. 

78Andrew C. Call, et al., Whistleblowers and 

Outcomes of Financial Misrepresentation 

Enforcement Actions, 56 J. Acct. Res. 123, 126 

(2018). See also Philip Berger, et al., Did the DoddFrank Whistleblower Provision Deter Accounting 

Fraud? (Jan. 2021) (unpublished manuscript) 

available at https://papers.ssrn.com/sol3/ 

papers.cfm?abstract_id=3059231 (‘‘[F]ind[ing] that 

exposure to Dodd-Frank reduces the likelihood of 

accounting fraud of treatment firms by 17% relative 

to control firms.’’); Alexander Dyck, et al., Who 

Blows the Whistle on Corporate Fraud?, 65 J. Fin. 

2213, 2215 (2010) (‘‘[A] strong monetary incentive 

to blow the whistle does motivate people with 

information to come forward.’’). 

79See Christine Weidman & Chummei Zhu, Do 

the SEC Whistleblower Provisions of Dodd Frank 

Deter Aggressive Financial Reporting (Feb. 24, 

2020) (unpublished manuscript), available at 

https://papers.ssrn.com/sol3/papers.cfm?abstract_

id=3105521. See also Jaron H. White, The Deterrent 

Effect of Employee Whistleblowing on Firms’ 

Financial Misreporting and Tax Aggressiveness, 92 

Acct. Rev., 247–80 (2017). 

80See Jacob Raleigh, The Deterrent Effect of 

Whistleblowing on Insider Trading (Sept. 29, 2021) 

(unpublished manuscript), available at https://

papers.ssrn.com/sol3/papers.cfm?abstract_

id=3672026. 

81 It would be difficult to predict with any degree 

of certainty how often the Comparability Approach 

would be relevant, particularly as whistleblower 

programs change, and new whistleblower programs 

are implemented. That said, as discussed above, the 

Commission has seen an increase in the number of 

award matters that would potentially implicate the 

Comparability Approach. 

III. General Request for Public 

Comment 

We request and encourage any 

interested person to submit comments 

on any aspect of the proposed rule 

amendments, interpretations, or other 

items specified above, including the 

economic analysis contained below 

(especially if accompanied by 

supporting data and analysis of the 

issues addressed therein). 

Finally, other than the items 

specifically identified in this release, 

persons wishing to comment are 

expressly advised that the Commission 

is not proposing any other changes to 

the whistleblower program rules (i.e., 17 

CFR 240.21F–1 through 240.21F–18 

(Exchange Act Rules 21F–1 through 

21F–18)), nor is the Commission 

otherwise reopening any of those rules 

for comment.72

IV. Economic Analysis 

The Commission is sensitive to the 

economic consequences of its rules, 

including the benefits, costs, and effects 

on efficiency, competition, and capital 

formation. Section 23(a)(2) 73 of the 

Exchange Act requires the Commission, 

in promulgating rules under the 

Exchange Act, to consider the impact 

that any rule may have on competition 

and prohibits the Commission from 

adopting any rule that would impose a 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. Further, 

Section 3(f) of the Exchange Act 74

requires the Commission, when 

engaging in rulemaking where it is 

required to consider or determine 

whether an action is necessary or 

appropriate in the public interest, to 

consider, in addition to the protection of 

investors, whether the action will 

promote efficiency, competition, and 

capital formation. 

This economic analysis concerns the 

proposed amendments to Exchange Act 

Rule 21F–3 and Rule 21F–6. As 

discussed above, the proposed 

amendments to Rule 21F–3(b)(3) would 

allow awards for related actions if an 

alternative whistleblower program has 

an award range or award cap that would 

restrict the maximum potential award 

from that other program to an amount 

that is meaningfully lower than the 

maximum potential award that the 

Commission could make. The proposed 

amendment to Rule 21F–6 would 

eliminate the Commission’s discretion 

to consider the dollar amounts to reduce 

an award. Although the impact of the 

proposed amendments is expected to be 

small, to the extent that there is an 

impact, the amendments could increase 

the size of some whistleblower awards 

and therefore the incentives for 

whistleblowers to submit tips. 

The benefits and costs discussed 

below are difficult to quantify. For 

example, we do not have a way of 

estimating quantitatively the extent to 

which the proposed rules could affect 

our enforcement program by altering 

whistleblowing incentives. Similarly, 

we are unable to quantify any costs (or 

benefit) to the whistleblower program’s 

IPF associated with the Comparability 

Approach or the three other approaches 

discussed above for amending Rule 

21F–(b)(3). Therefore, the discussion of 

economic effects of the proposed 

amendments is qualitative in nature. 

A. Economic Baseline 

To examine the potential economic 

effects of the amendments, we employ 

as a baseline the set of rules that 

implement the SEC’s whistleblower 

program as amended in September 

2020.75 Over the past 10 years, the 

whistleblower program has been an 

important component of the 

Commission’s efforts to detect 

wrongdoing and protect investors in the 

marketplace, particularly where fraud is 

concealed or difficult to find. The 

program has received a high number of 

submissions from whistleblowers and it 

has also produced substantial awards.76

Both the number of submissions and the 

number and dollar amount of awards 

per year have increased considerably 

since the program was initiated.77

Whistleblower programs, and the 

SEC’s whistleblower program in 

particular, have been studied by 

economists who report findings 

consistent with award programs being 

effective at contributing to the discovery 

of violations. For example, a recent 

publication reports that, among other 

benefits, ‘‘[w]histleblower involvement 

[in the enforcement process] is 

associated with higher monetary 

penalties for targeted firms and 

employees.’’ 78 In addition, current 

working papers report that the SEC’s 

whistleblower program deters aggressive 

(i.e., potentially misleading) financial 

reporting 79 and insider trading.80

B. Proposed Rules 

1. Proposed Rule 21F–3(b)(3) 

The proposed rule amendments may 

affect SEC whistleblower awards in 

cases where there is a potential related 

action that could be covered by another 

whistleblower program. Turning first to 

the Comparability Approach, it would 

authorize the Commission to make 

awards in particular situations where, 

under the Multiple-Recovery Rule, 

another award program would 

otherwise apply if that program has the 

more direct or relevant relationship to 

the underlying (non-Commission) 

related action.81 The Comparability 

Approach would do this by authorizing 

the Commission to make an award 

irrespective of the related action’s 

relative relationship to the two award 

programs if the other award program is 

discretionary, or structured to provide 

meaningfully smaller awards than the 

maximum potential award that could be 

granted by the SEC’s program, or if the 

maximum total award amount that the 

Commission could pay is less than or 

equal to $5 million. The 

Whistleblower’s Choice Option, by 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9293 

82See infra notes 84 and 85. 

83 In theory, the Whistleblower’s Choice Option 

could result in a larger award than the 

Comparability Approach. For example, a 

comparable program, such as the CFTC’s program, 

might potentially determine an award amount at 20 

percent. If, in that case, the Commission would 

have exercised its discretion to determine an award 

at 30 percent for the related action, the 

whistleblower would receive a larger amount under 

the Whistleblower’s Choice Option than under the 

Comparability Approach. 

84The complex mix of pecuniary and nonpecuniary elements that motivate whistleblowers 

were described in the economic analysis for the 

2020 Adopting Release for Rule 21F–3(b)(3), section 

VI.B.2, see Adopting Release, 85 FR 70937. 

85See Andrew C. Call, et al., Rank and File 

Employees and the Discovery of Misreporting: The 

Role of Stock Options, 62 J. Acct. & Econ. 277, 297– 

99 (2016). See also Jonas Heese & Gerardo PerezCavazos, The Effect of Retaliation Costs on 

Employee Whistleblowing, 71 J. Acct. & Econ. 

101385 (2021). 

86 17 CFR 240.21F–14(d) (Exchange Act Section 

21F–14(d)), which describes the procedures 

applicable to the payment of awards, indicates that 

if there are insufficient amounts available in the IPF 

to pay the entire amount of an award within a 

reasonable period of time, then the balance of the 

payment shall be paid when amounts become 

available. These procedures specify the relative 

priority of competing claims. 

87See generally Exchange Act Section 

21F(g)(3)(A). At the end of FY 2021, the IPF’s 

balance was $144,442,134. To date, the largest 

amount the award fund has ever had is 

approximately $453 million. See 2013 Annual 

Report to Congress on the Dodd-Frank 

Whistleblower Program available at https://

www.sec.gov/files/annual-report-2013.pdf. 

88See supra note 3. See also Exchange Act 

Section 21F(c)(1)(B)(ii). 

89The award presumption established by Rule 

21F–6(c) could help limit the overall administrative 

costs, however. See Adopting Release, 85 FR 70911 

(discussing potential ‘‘gains in efficiency from 

streamlining the award determination process’’ 

when the $5 million award presumption would 

apply during the award-calculation phase). 

90Similar to the proposed amendments to Rule 

21F–3(b)(3), to the extent that program costs 

increase as a result of these proposed amendments, 

there would be an increase in the possibility that 

the IPF would be depleted. As described above, an 

award that exhausted the IPF could produce 

additional effects that would depend on the size of 

the shortfall and the SEC whistleblower awards that 

would otherwise be issued and paid during the 

shortfall period. See supra notes 86 through 88 and 

accompanying text. 

contrast, would allow the Commission 

to make an award irrespective of the 

existence of another program and allow 

the whistleblower to decide whether to 

accept the Commission’s award or the 

other program’s award. While the two 

approaches are structured differently, 

the end result is that both the 

Comparability Approach and the 

Whistleblower’s Choice Option may 

increase the total dollar award amount 

for a whistleblower compared to the 

baseline. Thus both options could 

increase the incentives for 

whistleblowers.82

The Whistleblower’s Choice Option 

might have a slightly different incentive 

effect, since a comparison would be 

made between realizable award amounts 

rather than analysis of award 

structures.83 To the extent that a 

whistleblower prefers to exercise 

discretion over the selection of awards 

for the same related action, the 

whistleblower may prefer the 

Whistleblower’s Choice Option because 

the whistleblower would have an 

opportunity to make a decision in every 

instance where another award program 

might apply. In contrast, the 

Comparability Approach would not 

offer the whistleblower the opportunity 

to exercise discretion. 

To the extent that these amendments 

increase the willingness of some 

individuals to come forward with 

information about potential securities 

law violations, this could, in turn, 

increase Commission enforcement 

activity and deter wrongdoing. The 

effects of the rule changes are expected 

to be small, due to the limited 

circumstances under which they would 

apply, and because there are many 

factors, including non-pecuniary 

incentives, that motivate 

whistleblowers.84 Although the effects 

may be small, economic research 

suggests that changes in whistleblowing 

incentives may have an effect on the 

frequency of whistleblowing activity.85

Because these amendments may 

increase the amounts paid to 

whistleblowers under certain 

circumstances, there may be costs 

associated with the proposed changes. 

One possibility is that the IPF would be 

depleted.86 For example, assume the 

DOJ collected $1.5 billion on a related 

action. If there were a meritorious 

whistleblower involved who was 

entitled to an award, then even a midrange 20 percent award would require 

the Commission to pay the 

whistleblower $300 million, an amount 

that could well exhaust the IPF.87 An 

award that exhausted the IPF could 

produce additional effects that would 

depend on the size of the shortfall and 

the SEC whistleblower awards that 

would otherwise be issued and paid 

during the shortfall period.88

In addition, we expect that these 

proposals would increase the 

administrative costs for the SEC’s 

whistleblower program. For example, 

the Comparability Approach would 

require the Commission to compare 

whistleblower programs based on the 

expected award amounts from those 

programs. However, we believe these 

costs would be small relative to the 

baseline, and, to the extent that the 

program structures are stable, the 

comparisons may not need to be 

repeated for each case. In contrast, the 

Whistleblower’s Choice Option could be 

expected to increase the administrative 

costs relative to the baseline more than 

the Comparability Approach because it 

would require the Commission to 

determine whether an award should be 

granted in each case where there is a 

related action and a separate 

whistleblower program.89 As described 

above, the increase in administrative 

costs is expected to be greater for the 

Whistleblower’s Choice Option than for 

the Comparability Approach. 

2. Proposed Rule 21F–6 

The proposed rule change would 

eliminate the Commission’s 

discretionary authority to consider 

dollar amounts in reducing awards 

while retaining the Commissions’ 

discretionary authority to consider 

dollar amounts to increase awards. The 

2020 amendments that include express 

language to authorize the Commission 

to consider, in its discretion, the dollar 

amount of an award when making an 

award determination may have 

increased whistleblowers’ uncertainty 

relating to the program and thus 

potentially reduced their willingness to 

report potential misconduct. To the 

extent that the 2020 amendments have 

created uncertainty that may have 

diminished a whistleblower’s 

willingness to come forward, 

eliminating this discretionary authority 

would reduce uncertainty and thus 

potentially encourage more 

whistleblowing. However, we cannot 

determine with any reasonable degree of 

certainty if the proposed revisions to 

Rule 21F–6 would affect a 

whistleblower’s willingness to report a 

potential securities law violation. To the 

extent that the Commission would have 

exercised the discretion to lower award 

amounts, the amendments to Rule 21F– 

6 would increase program costs by any 

such amounts.90

C. Additional Alternatives 

As discussed above, the Offset 

Approach and the Topping-Off 

Approach are alternatives that may also 

increase whistleblower award 

incentives. For example, under certain 

circumstances, the Offset Approach may 

produce award amounts in related 

actions that are comparable, if not 

identical, to the awards produced under 

the Comparability Approach and the 

Whistleblower’s Choice Approach. In 

contrast, the Topping-Off Approach may 


jspears on DSK121TN23PROD with PROPOSALS1
9294 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

91As described above, the Topping-Off Approach 

would not allow the Commission to provide an 

increase to the covered-action in those instances 

where the Commission grants an award at the 30 

percent statutory cap, which occurs in a substantial 

portion of cases. 

92See Adopting Release, 76 FR 34362. 

93Public Law 104–121, tit. II, 110 Stat 857 (1996). 

94 5 U.S.C. 603(a). 

95 5 U.S.C. 605(b). 

result in smaller changes in the award 

amounts.91

As also discussed above, both of these 

approaches would likely increase the 

Commission’s award-processing time, 

because the Commission’s final awardamount determinations would be 

dependent on the completion resolution 

of the award process by the entity or 

authority administering the other award 

program. Additional delays may 

adversely affect whistleblower 

incentives. As a result, despite the 

generally positive expected impact on 

award amounts, the net impact on 

whistleblower incentives from the 

Offset Approach and the Topping-Off 

Approach is ambiguous. 

D. Effects of the Proposed Rules on 

Efficiency, Competition, and Capital 

Formation 

As discussed earlier, the Commission 

is sensitive to the economic 

consequences of its rules, including the 

effects on efficiency, competition, and 

capital formation. The Commission 

believes that the proposed amendments 

would make incremental changes to its 

whistleblower program. Thus, the 

Commission does not anticipate the 

effects on efficiency, competition, and 

capital formation to be significant. 

The proposed rules could have a 

positive indirect impact on investment 

efficiency and capital formation by 

increasing the incentives of potential 

whistleblowers to provide information 

on possible violations. To the extent 

that increased whistleblowing 

incentives stemming from the proposed 

rules result in more timely reporting of 

useful information on possible 

violations or the reporting of higher 

quality information on possible 

violations, the Commission’s 

enforcement activities could become 

more effective. More effective 

enforcement could lead to earlier 

detection of violations and increased 

deterrence of potential future violations, 

which could improve price efficiency 

and assist in a more efficient allocation 

of investment funds. Securities frauds, 

for example, can cause inefficiencies in 

the economy by diverting investment 

funds from legitimate, productive 

uses.92

Request for Comment 

The Commission seeks commenters’ 

views and suggestions on all aspects of 

its economic analysis of the proposed 

amendments. In particular, the 

Commission asks commenters to 

consider the following questions: 

14. Are there costs and benefits 

associated with the proposed 

amendments that the Commission has 

not identified? If so, please identify 

them and, if possible, offer ways of 

estimating these costs and benefits. 

15. Are there effects on efficiency, 

competition, and capital formation 

stemming from the proposed 

amendments that the Commission has 

not identified? If so, please identify 

them and explain how the identified 

effects result from one or more 

amendments. 

V. Small Business Regulatory 

Enforcement Fairness Act 

For purposes of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (‘‘SBREFA’’),93 the Commission 

solicits data to determine whether the 

proposed rule amendments constitute a 

‘‘major’’ rule. Under SBREFA, a rule is 

considered ‘‘major’’ where, if adopted, it 

results or is likely to result in: 

• An annual effect on the economy of 

$100 million or more (either in the form 

of an increase or a decrease); 

• A major increase in costs or prices 

for consumers or individual industries; 

or 

• Significant adverse effects on 

competition, investment, or innovation. 

Commenters should provide 

empirical data on: (a) The potential 

annual effect on the economy; (b) any 

increase in costs or prices for consumers 

or individual industries; and (c) any 

potential effect on competition, 

investment or innovation. 

VI. Regulatory Flexibility Act 

Certification 

Section 603(a) of the Regulatory 

Flexibility Act 94 requires the 

Commission to undertake an initial 

regulatory flexibility analysis of the 

proposed rules unless the Commission 

certifies that the proposed rules, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities.95

Small entity is defined in Section 

601(6) of Title 5 of the U.S. Code to 

mean ‘‘small business,’’ ‘‘small 

organization,’’ and ‘‘small governmental 

jurisdiction’’ (see Section 601(3) 

through (5)). The definition of ‘‘small 

entity’’ does not include individuals. 

The proposed rules apply only to an 

individual, or individuals acting jointly, 

who provide information to the 

Commission relating to the violation of 

the securities laws. Companies and 

other entities are not eligible to 

participate in the whistleblower award 

program as whistleblowers. 

Consequently, the persons that would 

be subject to the proposed rules are not 

‘‘small entities’’ for purposes of the 

Regulatory Flexibility Act. 

For the reasons stated above, the 

Commission certifies, pursuant to 605(b) 

of Title 5 of the U.S. Code that the 

proposed rules if adopted would not 

have a significant economic impact on 

a substantial number of small entities. 

Solicitation of Comments: We 

encourage the submission of comments 

with respect to any aspect of this 

Regulatory Flexibility Act Certification. 

To the extent that commenters believe 

that the proposed rules if adopted might 

have a covered impact, we ask they 

describe the nature of any impact and 

provide empirical data supporting the 

extent of the impact. We will place any 

such comments in the same public file 

as comments on the proposed 

amendments themselves. 

VII. Statutory Basis 

The Commission proposes the rule 

amendments contained in this 

document under the authority set forth 

in Sections 3(b), 21F, and 23(a) of the 

Exchange Act. 

List of Subjects in 17 CFR Part 240 

Securities, Whistleblowing. 

Text of the Proposed Amendments 

For the reasons set out in the 

preamble, title 17, chapter II of the Code 

of Federal Regulations is proposed to be 

amended as follows: 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 1. The authority citation for part 240 

continues to read, in part, as follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78c–3, 78c–5, 78d, 78e, 78f, 

78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, 

78n, 78n–1, 78o, 78o–4, 78o–10, 78p, 78q, 

78q–1, 78s, 78u–5, 78w, 78x, 78dd, 78ll, 

78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– 

3, 80b–4, 80b–11, and 7201 et seq., and 8302; 

7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 

U.S.C. 1350; Pub. L. 111–203, 939A, 124 Stat. 

1376 (2010); and Pub. L. 112–106, sec. 503 

and 602, 126 Stat. 326 (2012), unless 

otherwise noted. 

* * * * * 

Section 240.21F is also issued under Pub. 

L. 111–203, § 922(a), 124 Stat. 1841 (2010). 

* * * * * 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9295 

Option 1 

■ 2. Amend § 240.21F–3 by: 

■ a. Revising paragraphs (b)(3) 

introductory text and (b)(3)(i) and (iii); 

and 

■ b. Adding paragraphs (b)(3)(iv), (v), 

and (vi). 

The revisions and additions read as 

follows: 

§ 240.21F–3 Payment of awards. 

* * * * * 

(b) * * * 

(3) The following provision shall 

apply where a claimant’s application for 

a potential related action may also 

involve a potential recovery from a 

comparable whistleblower award 

program (as defined in paragraph 

(b)(3)(iv) of this section) for that same 

action. 

(i) Notwithstanding paragraph (b)(1) 

of this section, if a judicial or 

administrative action is subject to a 

separate monetary award program 

established by the Federal Government, 

a state government, or a self-regulatory 

organization (SRO), the Commission 

will only potentially qualify for relatedaction status if either: 

(A) The Commission finds that the 

maximum total award that could 

potentially be paid by the Commission 

would not exceed $5 million; or 

(B) The Commission finds (based on 

the facts and circumstances of the 

action) that the Commission’s 

whistleblower program has the more 

direct or relevant connection to that 

action. 

* * * * * 

(iii) The conditions in paragraphs 

(b)(3)(iii)(A) through (C) of this section 

apply to a determination under 

paragraph (b)(3)(ii) of this section. 

(A) The Commission shall not make a 

related-action award to a claimant (or 

any payment on a related-action award 

if the Commission has already made an 

award determination) if the claimant 

receives any payment from the other 

program for that action. 

(B) If a claimant was denied an award 

by the other award program, the 

claimant will not be permitted to 

readjudicate any issues before the 

Commission that the governmental/SRO 

entity responsible for administering the 

other whistleblower award program 

resolved, pursuant to a final order of 

such government/SRO entity, against 

the claimant as part of the award denial. 

(C) If the Commission makes an award 

before an award determination is 

finalized by the governmental/SRO 

entity responsible for administering the 

other award program, the award shall be 

conditioned on the claimant making an 

irrevocable waiver of any claim to an 

award from the other award program. 

The claimant’s irrevocable waiver must 

be made within 60 calendar days of the 

claimant receiving notification of the 

Commission’s final order. 

(iv) The provisions of paragraphs 

(b)(3)(iv)(A) through (D) of this section 

apply to program comparability 

determinations. 

(A) For purposes of paragraph (b)(3) of 

this section, a comparable 

whistleblower award program is an 

award program that satisfies the 

following criteria: 

(1) The award program is 

administered by an authority or entity 

other than the Commission; 

(2) The award program does not have 

an award range that could operate in a 

particular action to yield an award for 

a claimant that is meaningfully lower 

(when assessed against the maximum 

and minimum potential awards that 

program would allow) than the award 

range that the Commission’s program 

could yield (i.e., 10 to 30 percent of 

collected monetary sanctions); and 

(3) The award program does not have 

a cap that could operate in a particular 

action to yield an award for a claimant 

that is meaningfully lower than the 

maximum award the Commission could 

grant for the action (i.e., 30 percent of 

collected monetary sanctions in the 

related action). 

(4) The authority or entity 

administering the program may not in 

its sole discretion deny an award 

notwithstanding the fact that a 

whistleblower otherwise satisfies the 

established eligibility requirements and 

award criteria. 

(B) The Commission shall make a 

determination on a case-by-case basis 

whether an alternative award program is 

a comparable award program for 

purposes of the particular action on 

which the claimant is seeking a relatedaction award with respect to paragraphs 

(b)(3)(iv)(A)(1) through (3) of this 

section. 

(C) If the Commission determines that 

an alternative award program is not 

comparable, the Commission shall 

condition its award on the meritorious 

whistleblower making within 60 

calendar days of receiving notification 

of the Commission’s final award an 

irrevocable waiver of any claim to an 

award from the other award program. 

(D) A whistleblower whose relatedaction award application is subject to 

the provisions of paragraph (b)(3) of this 

section (including a whistleblower 

whose related-action award application 

implicates another award program that 

does not qualify as a comparable 

program as a result of paragraph 

(b)(3)(iv)(A) of this section) has the 

affirmative obligation to demonstrate 

that the whistleblower has complied 

with the terms and conditions of this 

section regarding an irrevocable waiver. 

This shall include taking all steps 

necessary to authorize the 

administrators of the other program to 

confirm to staff in the Office of the 

Whistleblower (or in writing to the 

claimant or the Commission) that an 

irrevocable waiver has been made. 

(v) A claimant seeking a related-action 

award also has an affirmative obligation 

to promptly inform the Office of the 

Whistleblower if the claimant applies 

for an award on the same action from 

another award program. 

(vi) The Commission may deem a 

claimant ineligible for a related-action 

award if any of the conditions and 

requirements of paragraph (b)(3) of this 

section in connection with that related 

action are not satisfied. 

Option 2 

■ 3. Amend § 240.21F–3 by revising 

paragraph (b)(3) to read as follows: 

§ 240.21F–3 Payment of awards. 

* * * * * 

(b) * * * 

(3) The following terms and 

conditions apply whenever an award 

claimant’s application for an award in 

connection with a related action may 

also involve a potential recovery from 

another whistleblower award program 

for that same action. 

(i) If the Commission determines that 

the claimant qualifies for an award for 

the related action, any payment of that 

award shall be conditioned on the 

claimant making an irrevocable waiver 

of any award or potential award from 

the other award program. In 

determining whether a claimant 

qualifies for an award on a related 

action (and in setting the amount of any 

award), the Commission shall process 

the application without regard to the 

existence of the alternative award 

program or any award determination 

that the alternative program reaches. 

(ii) The Commission shall not make a 

related-action award to a claimant (or 

any payment on an award if the 

Commission has already made an award 

determination) if the claimant has 

received at any point prior to the 

Commission making any payment on a 

related-action award any payment from 

the other program for that action. 

(iii) To receive payment from the 

Commission for a related-action award, 

a claimant must make an irrevocable 

waiver of any award from the other 

program within 60 calendar days of 

receiving a final notification from both 


jspears on DSK121TN23PROD with PROPOSALS1
9296 Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 

award programs regarding the award 

amounts. 

(iv) A claimant subject to paragraph 

(b)(3) of this section has the affirmative 

obligation to demonstrate to the 

satisfaction of the Commission that the 

claimant has complied with the terms 

and conditions of this section regarding 

an irrevocable waiver. This may include 

taking all steps necessary to authorize 

the administrators of the other program 

to confirm to staff in the Office of the 

Whistleblower (or in writing to the 

claimant or the Commission) that an 

irrevocable waiver has been made. 

(v) A claimant seeking a related-action 

award has an affirmative obligation to 

promptly notify the Office of the 

Whistleblower in writing if the claimant 

applies for an award on the same action 

from another award program. 

(vi) The Commission may deem a 

claimant ineligible for a related-action 

award if any of the conditions and 

requirements of paragraph (b)(3) of this 

section in connection with that related 

action are not satisfied. 

■ 4. Amend § 240.21F–4 by revising 

paragraph (c)(2) to read as follows: 

§ 240.21F–4 Other definitions. 

* * * * * 

(c) * * * 

(2) You gave the Commission original 

information about conduct that was 

already under examination or 

investigation by the Commission, the 

Congress, any other authority of the 

Federal Government, a state attorney 

general or securities regulatory 

authority, any self-regulatory 

organization, or the PCAOB (except in 

cases where you were an original source 

of this information as defined in 

paragraph (b)(5) of this section), and 

your submission significantly 

contributed to the success of the action; 

or 

* * * * * 

■ 5. Amend § 240.21F–6 by adding 

paragraph (d) to read as follows: 

§ 240.21F–6 Criteria for determining 

amount of award. 

* * * * * 

(d) Consideration of the dollar 

amount of an award. When applying the 

award factors specified in paragraphs (a) 

and (b) of this section, the Commission 

may consider the dollar amount of a 

potential award for the limited purpose 

of increasing the award amount. The 

Commission shall not, however, use the 

dollar amount of a potential award as a 

basis to lower a potential award, 

including but not limited to in applying 

the factors specified in paragraphs (a) 

and (b) of this section. 

■ 6. Amend § 240.21F–8 by revising 

paragraph (e)(4)(ii) to read as follows: 

§ 240.21F–8 Eligibility and forms. 

* * * * * 

(e) * * * 

(4) * * * 

(ii) If, within 30 calendar days of the 

Office of the Whistleblower providing 

the foregoing notification, you withdraw 

the relevant award application(s), the 

withdrawn award application(s) will not 

be considered by the Commission in 

determining whether to exercise its 

authority under paragraph (e) of this 

section. 

■ 7. Amend § 240.21F–10 by revising 

paragraph (e) to read as follows: 

§ 240.21F–10 Procedures for making a 

claim for a whistleblower award in SEC 

actions that result in monetary sanctions in 

excess of $1,000,000. 

* * * * * 

(e) You may contest the Preliminary 

Determination made by the Claims 

Review Staff by submitting a written 

response to the Office of the 

Whistleblower setting forth the grounds 

for your objection to either the denial of 

an award or the proposed amount of an 

award. The response must be in the 

form and manner that the Office of the 

Whistleblower shall require. You may 

also include documentation or other 

evidentiary support for the grounds 

advanced in your response. In applying 

the award factors specified in 

§ 240.21F–6, and determining the award 

dollar and percentage amounts set forth 

in the Preliminary Determination, the 

award factors may be considered by the 

SEC staff and the Commission in dollar 

terms, percentage terms or some 

combination thereof, subject to the 

limitations imposed by § 240.21F–6(d). 

Should you choose to contest a 

Preliminary Determination, you may set 

forth the reasons for your objection to 

the proposed amount of an award, 

including the grounds therefore, in 

dollar terms, percentage terms or some 

combination thereof. 

(1) Before determining whether to 

contest a Preliminary Determination, 

you may: 

(i) Within 30 calendar days of the date 

of the Preliminary Determination, 

request that the Office of the 

Whistleblower make available for your 

review the materials from among those 

set forth in § 240.21F–12(a) that formed 

the basis of the Claims Review Staff’s 

Preliminary Determination. 

(ii) Within 30 calendar days of the 

date of the Preliminary Determination, 

request a meeting with the Office of the 

Whistleblower; however, such meetings 

are not required, and the office may in 

its sole discretion decline the request. 

(2) If you decide to contest the 

Preliminary Determination, you must 

submit your written response and 

supporting materials within 60 calendar 

days of the date of the Preliminary 

Determination, or if a request to review 

materials is made pursuant to paragraph 

(e)(1) of this section, then within 60 

calendar days of the Office of the 

Whistleblower making those materials 

available for your review. 

* * * * * 

■ 8. Amend § 240.21F–11 by revising 

paragraphs (a), (c), and (e) to read as 

follows: 

§ 240.21F–11 Procedures for determining 

awards based upon a related action. 

(a) If you are eligible to receive an 

award following a Commission action 

that results in monetary sanctions 

totaling more than $1,000,000, you also 

may be eligible to receive an award in 

connection with a related action (as 

defined in § 240.21F–3). 

* * * * * 

(c) The Office of the Whistleblower 

may request additional information 

from you in connection with your claim 

for an award in a related action to 

demonstrate that you directly (or 

through the Commission) voluntarily 

provided the governmental/SRO entity 

(as specified in § 240.21F–3(b)(1)) the 

same original information that led to the 

Commission’s successful covered 

action, and that this information led to 

the successful enforcement of the 

related action. Further, the Office of the 

Whistleblower, in its discretion, may 

seek assistance and confirmation from 

the governmental/SRO entity in making 

an award determination. Additionally, if 

your related-action award application 

might implicate a second whistleblower 

program, the Office of the 

Whistleblower is authorized to request 

information from you or to contact any 

authority or entity responsible for 

administering that other program, 

including disclosing the whistleblower’s 

identity if necessary, to ensure 

compliance with the terms of § 240.21F– 

3(b)(3). 

* * * * * 

(e) You may contest the Preliminary 

Determination made by the Claims 

Review Staff by submitting a written 

response to the Office of the 

Whistleblower setting forth the grounds 

for your objection to either the denial of 

an award or the proposed amount of an 

award. The response must be in the 

form and manner that the Office of the 

Whistleblower shall require. You may 

also include documentation or other 

evidentiary support for the grounds 

advanced in your response. In applying 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 34 / Friday, February 18, 2022 / Proposed Rules 9297 

1The Controlled Substances Act, Public Law 91– 

513, tit. II, 84 Stat. 1242 (1970), as amended, is 

codified at 21 U.S.C. 801 et seq. 

the award factors specified in 

§ 240.21F–6, and determining the award 

dollar and percentage amounts set forth 

in the Preliminary Determination, the 

award factors may be considered by the 

SEC staff and the Commission in dollar 

terms, percentage terms or some 

combination thereof, subject to the 

limitations imposed by § 240.21F–6(d). 

Should you choose to contest a 

Preliminary Determination, you may set 

forth the reasons for your objection to 

the proposed amount of an award, 

including the grounds therefore, in 

dollar terms, percentage terms or some 

combination thereof. 

(1) Before determining whether to 

contest a Preliminary Determination, 

you may: 

(i) Within 30 calendar days of the date 

of the Preliminary Determination, 

request that the Office of the 

Whistleblower make available for your 

review the materials from among those 

set forth in § 240.21F–12(a) that formed 

the basis of the Claims Review Staff’s 

Preliminary Determination. 

(ii) Within 30 calendar days of the 

date of the Preliminary Determination, 

request a meeting with the Office of the 

Whistleblower; however, such meetings 

are not required, and the office may in 

its sole discretion decline the request. 

(2) If you decide to contest the 

Preliminary Determination, you must 

submit your written response and 

supporting materials within 60 calendar 

days of the date of the Preliminary 

Determination, or if a request to review 

materials is made pursuant to paragraph 

(e)(1) of this section, then within 60 

calendar days of the Office of the 

Whistleblower making those materials 

available for your review. 

* * * * * 

By the Commission. 

Dated: February 10, 2022. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2022–03223 Filed 2–17–22; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Highway Administration 

23 CFR Part 192 

[Docket No. FHWA–2020–0015] 

RIN 2125–AF93 

Drug Offender’s Driver’s License 

Suspension 

AGENCY: Federal Highway 

Administration (FHWA), U.S. 

Department of Transportation (DOT). 

ACTION: Notice of proposed rulemaking 

(NPRM); request for comments. 

SUMMARY: FHWA proposes to amend its 

regulations governing each State’s 

certification of whether they choose to 

enact and enforce drug offender’s 

driver’s license requirements or choose 

to oppose enacting or enforcing the drug 

offender’s driver’s license requirement. 

The regulations apply to each State and 

specify the steps that States must take 

to avoid the withholding of Federal-aid 

highway funds for noncompliance with 

the certification requirements. Highway 

Safety is the top priority of both DOT 

and FHWA. The changes that FHWA 

has proposed to the regulations will not 

negatively impact safety, efforts to 

combat substance abuse, or the 

substantive protections provided by the 

State certification requirements. Rather, 

they simply update the regulations to 

align with the wording of relevant 

statutes, increase clarity, and reduce 

administrative burden on States. 

Reducing fatalities and serious injuries 

resulting from impairment will continue 

to be a top priority of the Department 

and FHWA. 

DATES: Comments must be received on 

or before March 21, 2022. 

ADDRESSES: To ensure that you do not 

duplicate your docket submissions, 

please submit them by only one of the 

following means: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov and follow 

the online instructions for submitting 

comments. 

• Mail: Docket Management Facility, 

U.S. Department of Transportation, 1200 

New Jersey Avenue SE, Washington, DC 

20590–0001. 

• Hand Delivery: U.S. Department of 

Transportation, Docket Operations, 

West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The telephone 

number is (202) 366–9329. 

All submissions should include the 

agency name and the docket number 

that appears in the heading of this 

document or the Regulatory 

Identification Number (RIN) for the 

rulemaking. All comments received will 

be posted without change to http://

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Sarah Pascual, Office of Safety, (HSA), 

(202) 366–0087, or via email at 

sarah.pascual@dot.gov, or Ms. Dawn 

Horan, Office of the Chief Counsel 

(HCC–30), (202) 366–9615, or via email 

at dawn.m.horan@dot.gov. Office hours 

are from 8:00 a.m. to 4:30 p.m., E.T., 

Monday through Friday, except Federal 

holidays. 

SUPPLEMENTARY INFORMATION: 

Electronic Access and Filing 

This document and all comments 

received may be viewed online at http:// 

www.regulations.gov using the docket 

number listed above. Electronic retrieval 

help and guidelines are available on the 

website. It is available 24 hours each 

day, 365 days each year. An electronic 

copy of this document may also be 

downloaded from the Office of the 

Federal Register’s website at: 

www.FederalRegister.gov and the 

Government Publishing Office’s website 

at: www.GovInfo.gov. 

All comments received before the 

close of business on the comment 

closing date indicated above will be 

considered and will be available for 

examination in the docket at the above 

address. Comments received after the 

comment closing date will be filed in 

the docket and will be considered to the 

extent practicable. In addition to late 

comments, FHWA will also continue to 

file relevant information in the docket 

as it becomes available after the 

comment period closing date, and 

interested persons should continue to 

examine the docket for new material. A 

final rule may be published at any time 

after close of the comment period and 

after DOT has had the opportunity to 

review the comments submitted. 

Background 

FHWA is required to withhold an 

amount equal to 8 percent of the amount 

of Federal-aid highway funds required 

to be apportioned to any State under 23 

U.S.C. 104(b)(1) and (2), the National 

Highway Performance Program and the 

Surface Transportation Block Grant 

Program, respectively, on the first day of 

each fiscal year if the State fails to meet 

the requirements in 23 U.S.C. 159 

associated with the revocation or 

suspension of driver’s licenses of 

individuals convicted of drug offenses. 

The statute (23 U.S.C. 159) provides for 

two ways the States can satisfy this 

requirement: (1) The State has enacted 

and is enforcing a law that requires in 

all circumstances, or requires in the 

absence of compelling circumstances 

warranting an exception, the revocation, 

or suspension for at least 6 months, of 

the driver’s license of any individual 

who is convicted of any violation of the 

Controlled Substances Act 1 or any drug 


jspears on DSK121TN23PROD with PROPOSALS1