[Federal Register Volume 75, Number 182 (Tuesday, September 21, 2010)]
[Rules and Regulations]
[Pages 57384-57385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23457]
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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(``Dodd-Frank Act'') \1\ repealed former Section 21A(e) of the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]
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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