I have been reading and writing a lot lately about the Dodd-Frank whistleblower provisions, including a column flagging some of the looming "cons" of these provisions that I expect will be published by Compliance Week next week. An article I saw today reminded me that under Section 922 of Dodd-Frank, the whistleblower need not be an employee of the company in question, but can be any individual, or 2 or more individuals acting jointly, who provides information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.‘(b) who provides information relating to a violation of the securities laws to the Commission.

As explained nicely in this article on Dow Jones News Wire, the open-ended nature of who can be a whistleblower may have been "inspired by Harry Markopolos, who hounded the SEC for years with his hunch that Madoff was running a giant Ponzi scheme." The article adds that:

This could allow the SEC to tap the intellectual abilities of academics and other experts to catch frauds, said Reuben Guttman, who heads the whistleblower practice at the law firm Grant & Eisenhofer.

"You could have a lot of extraordinarily, analytically brilliant people spending time thinking about why something doesn't add up," he said.

Interesting! This appears to open the door to the next generation of operations like Mark Cuban's ShareSleuth, which employed an investigative journalist to look for public companies that appeared to be engaging in financial fraud so that Cuban could sell the company's securities short before the fraud was exposed and the bottom fell out. Instead of selling short (or maybe in addition to selling short), an operation like ShareSleuth could now package up its findings and present them to the SEC for further investigation, in the hopes of receiving a huge whistleblower bounty down the road.