After months of reviews and meetings, the US Securities and Exchange Commission has proposed a whistleblower program that was mandated by Congress as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. And the agency describes its approach as “a simple, straightforward procedure for would-be whistleblowers” to provide information.

To be considered for an award, the SEC says that a whistleblower must “voluntarily provide the agency with original info about a violation of federal securities laws that leads to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions totaling more than $1 million.”

The issue is of concern to the pharmaceutical industry, given that many drugmakers have paid huge settlements and also pleaded guilty to crimes as the result of employees who filed whistleblower lawsuits that were pursued by federal prosecutors under the False Claims Act. Among them is Pfizer and Johnson & Johnson, both of which attended a closed-door meeting with SEC officials last week (look here).

At that session and in letters sent by their lawyers, drugmakers and other companies lobbied the agency to impose restrictions. And so the SEC proposal discourages employees from bypassing internal compliance programs, while also suggesting exclusions for employees with legal obligations, such as lawyers, independent auditors and compliance personnel, so they don’t unfairly “reap rewards.”

This exclusion is intended to prevent employees from “front running” legitimate internal investigations, but would no longer apply if a company does not disclose the info to the SEC within a reasonable time or acts in bad faith. “In these circumstances, such people can become whistleblowers,” according to the SEC statement.

This is only a proposal (you can read all of it right here) and the SEC is seeking comment, which you can file right here.

pic thx to katerha on flickr