Document ID: SEC-2010-1444-0001
Agency: sec
Document Type: Rule
Title: Rescission of Rules Pertaining to Payment of Bounties for Information Leading to Recovery of Civil Penalties for Insider Trading
Posted Date: 2010-09-21T04:00Z

[Federal Register: September 21, 2010 (Volume 75, Number 182)]
[Rules and Regulations]               
[Page 57384-57385]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se10-8]                         

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 201

[Release No. 34-62921]

 
Rescission of Rules Pertaining to the Payment of Bounties for 
Information Leading to the Recovery of Civil Penalties for Insider 
Trading

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(``Dodd-Frank Act'') \1\ repealed former Section 21A(e) of the 
Securities Exchange Act of 1934, which had authorized the Securities 
and Exchange Commission (``Commission'') to make monetary awards to 
persons who provided information leading to the recovery of civil 
penalties for insider trading violations. Because the statutory basis 
for the insider trading bounty program has been removed, the Commission 
is rescinding rules promulgated to administer the program.
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    \1\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010).

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DATES: Effective Date: September 21, 2010.

FOR FURTHER INFORMATION CONTACT: Kenneth H. Hall, Assistant Chief 
Counsel, (202) 551-4936, Office of Chief Counsel, Division of 
Enforcement, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-6553.

SUPPLEMENTARY INFORMATION: The Insider Trading and Securities Fraud 
Enforcement Act of 1988 authorized the Commission to award bounties to 
persons who provided information leading to the recovery of civil 
penalties for insider trading violations; the bounty provision was 
codified as former Section 21A(e) of the Securities Exchange Act of 
1934 (``Exchange Act''). In 1989, the Commission adopted procedural 
rules to administer the insider trading bounty program. See 
Applications for Bounty Awards on Civil Penalties Imposed in Insider 
Trading Litigation, Exchange Act Release No. 26994 (June 30, 1989).
    The Dodd-Frank Act created a new and broader program for making 
monetary awards to whistleblowers, codified as Section 21F of the 
Exchange Act.\2\ Under the new whistleblower program, the Commission is 
authorized to make awards to persons who voluntarily provide the 
Commission

[[Page 57385]]

with ``original information'' about a violation of the Federal 
securities laws that leads to the successful enforcement of a ``covered 
judicial or administrative action,'' or a ``related action,'' as those 
terms are defined by the Dodd-Frank Act. Unlike the insider trading 
bounty program, awards may be paid in connection with original 
information concerning any violation of the Federal securities laws. 
Awards may range from 10 to 30 percent of the amounts collected as 
monetary sanctions imposed in the covered judicial or administrative 
action or related actions.
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    \2\ Section 922 of the Dodd-Frank Act.
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    In connection with enactment of the new whistleblower provision, 
Congress repealed Section 21A(e).\3\ Because that statutory provision 
is no longer available as a basis for awarding bounties in insider 
trading cases, the Commission is rescinding its rules for 
administration of the insider trading bounty program.
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    \3\ Section 923(b) of the Dodd-Frank Act.
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Procedural and Other Matters

    The Administrative Procedure Act (``APA'') generally requires an 
agency to publish notice of a proposed rulemaking in the Federal 
Register.\4\ This requirement does not apply, however, if the agency 
``for good cause'' finds * * * that notice and public procedure thereon 
are impracticable, unnecessary, or contrary to the public interest.'' 
\5\ Because the statutory authority for the insider trading bounty 
program has been repealed, the Commission is removing the rules 
administering the program from the Federal Register. These rules no 
longer have any practical effect, and their continued inclusion in the 
Federal Register might lead to public confusion. For these reasons, the 
Commission finds that good cause exists to dispense with public notice 
and comment because notice and comment would be unnecessary, 
impracticable and contrary to the public interest.\6\ For similar 
reasons the Commission finds good cause for this action to be effective 
immediately.\7\
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    \4\ See 5 U.S.C. 553(b).
    \5\ 5 U.S.C. 553(b).
    \6\ Similarly, the amendments do not require analysis under the 
Regulatory Flexibility Act. See 5 U.S.C. 601(2) and 603(a) (for 
purposes of Regulatory Flexibility Act analysis, the term ``rule'' 
means any rule for which the agency publishes a general notice of 
proposed rulemaking).
    \7\ Additionally, this finding satisfies the requirements for 
immediate effectiveness under the Small Business Regulatory 
Enforcement Fairness Act. See 5 U.S.C. 808(2); see also 5 U.S.C. 
801(a)(4).
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    Section 23(a)(2) of the Exchange Act requires the Commission to 
consider the competitive effects of rulemaking under the Exchange Act. 
Further, Section 3(f) of the Exchange Act requires us, when engaging in 
rulemaking where we are 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. Because 
Congress has repealed the insider trading bounty program, our removal 
of the procedural rules related to that program will not create any 
competitive advantages or disadvantages, or affect efficiency, 
competition, and capital formation.

Statutory Authority and Text of Amendments

    The Commission is removing regulations pursuant to authority 
provided by Section 23(a) of the Exchange Act.

List of Subjects in 17 CFR Part 201

    Administrative practice and procedure.

Text of Amendments

0
For the reasons set out in the preamble, Title 17, Chapter II of the 
Code of Federal Regulations is amended as follows:

PART 201--RULES OF PRACTICE

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 15 U.S.C. 77s, 77sss, 78w, 78x, 80a-37, and 80b-11; 5 
U.S.C. 504(c)(1).

Subpart C--[Removed and Reserved]

0
2. Remove and reserve Subpart C.

    Dated: September 15, 2010.

    By the Commission.

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-23457 Filed 9-20-10; 8:45 am]
BILLING CODE 8010-01-P