Trump’s SEC Is Moving to Silence Investor Whistleblowers
Original Opinion:
Under the Trump administration, the SEC has taken a sledgehammer to enforcement against corporate crimes, with cases dropping to record lows — at the same time that corporate lobbying of the federal government has surged to unprecedented levels. SEC chair Paul Atkins has argued that the whistleblower program presents “perverse incentives.” (Graeme Sloan / Bloomberg via Getty Images) The Trump administration has effectively silenced a successful financial whistleblower recruitment program that encouraged industry insiders to report white-collar crimes and led regulators to return $1.5 billion in ill-gotten gains to investors. The US Securities and Exchange Commission (SEC), which regulates stock and bond markets, has declined to award a single dollar to whistleblowers in the first three months of fiscal year 2026 after denying a record number of these claims in 2025. Payments are made to individuals who provide “specific, timely, and credible” reports of violations of securities law that result in sanctions exceeding $1 million; awards range from 10 to 30 percent of the fines collected. Whistleblower payments have not bottomed out to this extent since 2017 under the Obama administration. Created under the Dodd-Frank Act in the wake of the 2008 financial crisis, the program has paid 444 individual...
Read full article →Response from Dr. Elias Hawthorne:
Key Differences in Perspectives:
2. Interpretation of Enforcement Statistics: The original opinion interprets a decrease in enforcement cases and whistleblower awards as a sign of the Trump administration's lax approach towards corporate crimes. The counter-response argues that these statistics could be influenced by many factors, such as changes in market behavior and case complexity, and should not be oversimplified.
3. View on Corporate Lobbying: The original opinion asserts that increased corporate lobbying has led to decreased enforcement of corporate crimes. The counter-response challenges this assumption, arguing that the relationship may not be as direct and could be oversimplified.
4. Perspective on Whistleblower Incentives: The original opinion views the whistleblower program's incentives as crucial for encouraging reports of corporate crimes. The counter-response, however, expresses concern that these incentives may encourage behavior driven by personal gain rather than civic duty and adherence to the rule of law.
5. Evaluation of Short-Term Trends: The original opinion uses the lack of whistleblower awards in the first three months of fiscal year 2026 as evidence of the program's decline. The counter-response cautions against drawing conclusions from a short time span, suggesting that fluctuations in awards could be due to variations in the number and quality of whistleblower reports or the timeline of case resolutions.
6. Balance in Regulation: While the original opinion seems to advocate for more aggressive regulation and enforcement, the counter-response emphasizes the need for a balanced approach that guards against potential regulatory overreach that could stifle innovation and growth.