Which of the following legislations created the Securities and Exchange Commission (SEC) Office of the Whistleblower? a. The Glass-Steagall Act of 1933 b. The Dodd-Frank Act of 2010 c. The Sarbanes-Oxley Act of 2002 d. The Securities Exchange Act of 1934
The correct answer and explanation is:
The correct answer is b. The Dodd-Frank Act of 2010.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was a landmark piece of legislation passed in response to the financial crisis of 2007-2008. One of its key provisions was the establishment of the Office of the Whistleblower within the Securities and Exchange Commission (SEC). This office was designed to encourage individuals with knowledge of violations of securities laws to report such violations to the SEC.
The Whistleblower Program offers financial incentives for people who provide original information leading to successful enforcement actions. These individuals can receive monetary awards based on the sanctions imposed as a result of their information. The Dodd-Frank Act also protects whistleblowers from retaliation by employers, ensuring that they are not punished for coming forward with information about illegal activities.
The creation of the SEC Office of the Whistleblower was intended to enhance the SEC’s ability to detect and investigate corporate fraud, market manipulation, and other violations of securities laws. By incentivizing whistleblowers, the SEC can uncover information that might otherwise go unnoticed, especially in complex financial transactions. The whistleblower program has proven to be an important tool in uncovering large-scale corporate misconduct and has led to several significant enforcement actions over the years.
In comparison to other legislation, such as the Sarbanes-Oxley Act of 2002 and the Glass-Steagall Act of 1933, the Dodd-Frank Act specifically created the SEC Whistleblower Program. The Securities Exchange Act of 1934 is an earlier law that established the SEC itself but did not directly address whistleblower protection or incentives.