A federal agency is moving with little fanfare to revamp one of the most successful whistleblower programs in the government, alarming advocates who warn the changes will set back efforts to police Wall Street and punish corporate fraud.

Much like the whistleblower system for intelligence agencies that triggered the impeachment inquiry of President Donald Trump, the program grants anonymity to people who come forward with allegations of wrongdoing. But unlike that system, it deals with the private sector, offering cash payouts to people who provide information that helps the Securities and Exchange Commission identify fraud and wrongdoing.

The program was created in 2010 by the Democrats’ Wall Street oversight law. Tips, and substantial cash payouts, have flowed since it started in 2011.

The SEC has collected some 26,000 tips and complaints, resulting in more than $2 billion in penalties and restitution.

More than $300 million has been distributed in roughly 50 awards to people who provided actionable information. And taxpayers don’t foot the bill because the award money comes directly from funds the SEC collects in settlements.

The SEC’s program has also provided a windfall for the FBI and Justice Department. The SEC, a regulatory agency with only civil authority, often sends them referrals for criminal action that have brought convictions and jail terms for serious violators.

Now, with the backing of the business community, the two Republicans on the five-member SEC and the one independent are looking to make changes to the program that Chairman Jay Clayton says will make it more effective. Final adoption of the plan is expected this month, with only a majority vote on the five-member agency needed for approval.

Critics are aghast.

“It would destroy the program,” said Stephen Kohn, chairman of the National Whistleblower Center and a partner in the law firm Kohn, Kohn & Colapinto.

The proposed changes, Kohn said, are “counter to every whistleblower law, rule and policy.”

It’s just U.S. regulators’ latest move to unwind the stricter financial rules that were put in place after the 2008 financial crisis. Through scores of rulemaking actions, administration officials and regulators appointed by Trump have worked to reverse components of the law, dismissing Democratic warnings about the possibility of another financial meltdown. Republicans say that the law has slowed economic growth and needlessly restricted lending.

Business groups support the SEC’s plan to change the whistleblower program but downplay its likely impact. The U.S. Chamber of Commerce, the lead lobbying organization for corporate America, called the proposal “a small but nonetheless important step” toward improvement. It says the SEC “has found itself overwhelmed at times by a large number of low-quality complaints advanced by … bounty seekers more concerned with enriching themselves than truly protecting investors.”

Wall Street’s biggest trade group, the Securities Industry and Financial Markets Association, endorsed the proposal generally. It urged regulators to review the rules to encourage whistleblowers to report violations within their companies rather than going to the SEC.

The proposal would give the SEC discretion to set the smallest and largest cash awards to whistleblowers, among other changes. Critics say that change would likely discourage employees from reporting major frauds by lowering the chances of a huge payout. The payment for successful cases is now 10% to 30% of fines or restitution collected by the agency — which means the bigger the fraud, the larger the bounty.

The SEC also wants to impose new requirements for filing a whistleblower complaint. To receive legal protection from the SEC against retaliation — a core concern for people risking their careers and livelihoods — a whistleblower would have to report violations in writing, rather than the oral disclosures now permitted at the SEC and other federal agencies.

“Whistleblowers are the defenders of taxpayers, shareholders and consumers,” Sen. Ron Wyden of Oregon, the senior Democrat on the Senate Finance Committee, told The Associated Press in a statement. “Whistleblowers shouldn’t be punished because they don’t file a specific form at a specific time when they are putting themselves at personal and financial risk by blowing the whistle. The SEC ought to be encouraging whistleblowers to come forward and not place requirements to fill out government paperwork in their way.”

Asked about criticisms of the proposal, the SEC referred to statements by Clayton, the chairman. He has said that for awards below $2 million, the current percentage range is too “rigid” and the agency “should have the authority to depart upward (but not downward) from the amount determined by the percentage formula.” More than 60% of the awards paid out under the program have been below $2 million, Clayton said.

In a small number of cases with $100 million or more collected, the SEC would have discretion to limit the size of the payout to 10% or $30 million, whichever is greater. The change is intended to ensure that the agency “is a responsible steward of the public trust while continuing to provide strong whistleblower incentives,” the SEC says.

The agency also says requiring complaints to be put in writing to qualify for protection against retaliation presents “a minimal burden” for people who want to report violations and would make it easier for agency staff to track its use of the information.

Supporters question why the changes are necessary, given the successes of the program.

Three whistleblowers shared $83 million in awards in March 2018 for alerting the SEC to abuses by Merrill Lynch, accused by regulators of putting billions in customers’ assets at risk to generate trading profits. Merrill, owned by Bank of America, paid $415 million to settle the case in 2016. Similarly, a former finance executive at Monsanto exposed accounting violations related to one of the chemical giant’s flagship products, the weed killer Roundup. The company paid an $80 million SEC penalty in 2016, and the executive received a $22 million award.

Then there’s the impeachment investigation, which was spurred by a whistleblower in the intelligence community. That complaint, and a separate one filed at the IRS alleging improper efforts to interfere with the annual tax audit for Trump or Vice President Mike Pence, shows the value of whistleblowers to the country, advocates say.

“The latest developments demonstrate how fundamental whistleblowers are to holding government and corporations accountable, and how they should be protected,” said Shanna Devine, the worker health and safety advocate at Public Citizen. The SEC proposal, she said, “would send the wrong message.”

(AP)