* Rule rewards whistleblowers for tips
* Does not mandate internal reporting first
* SEC says already getting useful information
* Republican commissioners dissent
* U.S. Chamber of Commerce blasts rule (Adds mention of whistleblower history, Khuzami comment)
By Sarah N. Lynch
WASHINGTON, May 25 Corporate whistleblowers could score multi-million-dollar payouts for reporting financial wrongdoing under a new program approved by U.S. securities regulators on Wednesday.
A divided U.S. Securities and Exchange Commission voted 3-2 to finalize the measure that has grown into one of the most contentious requirements of last year's Dodd-Frank Wall Street overhaul law.
Tipsters would be paid between 10 and 30 percent of sanctions over $1 million for original and useful information.
Companies from Google Inc (GOOG.O) to JPMorgan Chase & Co (JPM.N) have expressed fears the whistleblower rule will undermine internal compliance programs at public companies by encouraging employees to go directly to the SEC.
The rule does not require whistleblowers to first, or simultaneously, report problems internally, as companies had sought.
In a concession to companies, the final SEC version would make a whistleblower still eligible for a reward if he or she reports wrongdoing to the company, and the company, in turn, reports it to the SEC.
A whistleblower can also improve the chances of receiving a higher percentage award by internal reporting, but the rule only protects the whistleblower from retaliation if the employee also reports wrongdoing to the SEC.
Business interests such as the U.S. Chamber of Commerce remain deeply unhappy about the rule and could appeal in court. The SEC had put "trial lawyer profits ahead of effective compliance," the chamber said in a statement.
Rewarding whistleblowers has a long history in the United States.
Last year the U.S. Department of Justice gave former GlaxoSmithKline Plc (GSK.L) employee Cheryl Eckard a $96 million reward under the U.S. False Claims Act, a Civil War-era law designed to uncover efforts to defraud government programs.
BREAK THE SILENCE
The SEC rule greatly expands the agency's authority to reward whistleblowers. Prior to Dodd-Frank the SEC could only reward whistleblowers for tips on insider-trading cases.
"Today's rules are intended to the break the silence of those who see a wrong," said SEC Chairman Mary Schapiro.
She said the final measure struck the correct balance between encouraging whistleblowers to report problems internally when appropriate, while providing the option of heading directly to the SEC.
SEC enforcement chief Robert Khuzami told the SEC's public meeting on Wednesday that the rule was already encouraging people to come forward. People who provided tips after Dodd-Frank was signed into law last July could be eligible for a reward.
The SEC's two Republican commissioners voted against the rule and raised numerous concerns, from its impact on internal compliance to fears it may inundate the SEC with complaints that do not prove to be fruitful.
"It significantly underestimates the negative impact on internal compliance programs and significantly overestimates our capacity to effectively triage and manage whistleblower complaints," said SEC Commissioner Kathleen Casey.
Supporters of the rule, such as the National Whistleblowers Center, lauded the agency for resisting opposition from corporate lobbyists.
The rule is expected to take effect 60 days after it is published in the Federal Register.
The Commodity Futures Trading Commission is working on a similar rule. (Reporting by Sarah N. Lynch; Editing by Tim Dobbyn)