SEC Sanctions Firm for Policies that (Theoretically Could Have) Curtailed Whistleblowers

On June 23, 2021, the U.S. Securities and Exchange Commission (the “Commission”) entered an administrative order (the “Order”) that, among other things, fined a broker-dealer (“BD”) $208,912 for alleged violations of Rule 21F-17(a), which relates to individuals reporting possible securities laws violations to the Commission (a.k.a., whistleblowers).

Practice Tip: While the Order was entered against a broker-dealer, Rule 21F-17(a) applies to all entities subject to the Commission’s jurisdiction (e.g., public companies, broker-dealers, and investment managers). Indeed, the Commission has previously sanctioned public companies and investment advisers for violations of Rule 21F-17(a).

Read more here for both a summary of the Order’s findings, and take-aways for legal and compliance practitioners who support firms that are subject to the Commission’s jurisdiction.

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