US SEC says will fix whistleblower rule if any problems

* New rules provide incentives for whistleblowers

* SEC says rules won't undermine internal compliance

* Website for whistleblowers to be unveiled Friday

By Andrea Shalal-Esa

WASHINGTON, Aug 11 (Reuters) - The U.S. Securities and Exchange Commission's controversial new whistleblower law takes effect on Friday after opponents failed to file any legal challenges, but the man in charge said the agency stood ready to make changes if any unintended problems cropped up.

The rules, approved on a 3-2 vote, emerged as one of the most contentious requirements of last year's Dodd-Frank Wall Street overhaul law. It will allow tipsters to be paid between 10 and 30 percent of sanctions over $1 million for original and useful information.

"If our program is not doing what it's intended to do, then we'll look at it and figure out ways to fix it," Sean McKessy, the former corporate lawyer who joined the SEC in late February to run the whistleblower program, told reporters after a speech at Georgetown University's McDonough School of Business.

Companies from Google Inc (GOOG.O) to JPMorgan Chase & Co (JPM.N) said they feared the rule would undermine internal compliance programs at public companies by encouraging employees to go directly to the SEC.

In the end, no lawsuits were filed, McKessy said.

McKessy, who worked for AOL (AOL.N) and Altria (MO.N), parent of cigarette maker Phillip Morris, before taking on his new role, said he had taken every opportunity to explain the new law to corporate lawyers, compliance officers and other interested parties since coming to the SEC.

He said he had participated in at least 10 panel discussions and webinars, reaching over 1,000 participants.

Earlier this week, he told Reuters that he had received an invitation to attend an anti-fraud conference in Beijing, although he would likely participate via videoconference due to budget constraints at the small regulatory agency.

HEAD OF THE "RAT FINKS"

Whistleblowers remain loathed in industry, but financial incentives should help the SEC ferret out more wrongdoing and could make investigations quicker and cheaper, McKessy said.

"Look in a thesaurus under 'whistleblower' and see what kind of words you get out. I'm either the head of the office of the rats, or the rat finks, or rat bastards," McKessy said.

"If even one fraud is stopped before it gets to a Madoff-type situation, then all the effort has been worth it."

Whistleblowers are still eligible for a reward if they reports wrongdoing to the company, and the company, in turn, reports it to the SEC, he said. In fact, they potentially stand to get more if they report it to the company first.

Another common concern was that the rules would incentivize corporate lawyers, compliance officers and external auditors to violate their professional ethics to grab big monetary rewards for any wrongdoing at their companies.

McKessy insisted the rules allowed those people to submit tips only under under "narrow circumstances."

No flood of tips had occurred after the rules were finalized, he said. But he said he and his staff, soon expanding to seven, would keep close tabs to see what happened when the rules actually take effect.

The SEC will unveil a new website on Friday, but tips can also be submitted via mail or fax. (Editing by Ted Kerr)