A recent SEC announcement shows the continuing rewarding of whistleblowing in the US. The SEC announced an additional payment of USD 150,000 to the first-ever Dodd-Frank whistleblower who had already received an award of USD 50,000. The SEC also announced it expects to collect additional money from defendants in this case. Individuals who "blow the whistle" can receive an award from between 10 and 30 percent of the total amounts collected. The case underlines the importance of companies revisiting their internal corporate compliance programs to ensure that appropriate and credible measures are in place for a person to report wrongful conduct, without fear of retaliation. Having a strong internal reporting system in place may encourage individuals to use internal reporting instruments prior to reporting to the SEC.
In April 2014, the U.S. Securities and Exchange Commission (SEC) announced an additional USD 150,000 payment to the first-ever SEC whistleblower. The whistleblower has now been awarded a total of nearly USD 200,000 since the award was announced in August 2012. This whistleblower helped the SEC stop a multi-million dollar fraud by providing documents and other significant information. The SEC stated at the time that the award was based on the USD 150,000 the SEC had collected thus far.
The SEC whistleblower award programme was created three years ago by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC is authorised by the US Congress to issue financial awards to individuals who come forward with high-quality information that leads to an SEC enforcement action in which over USD 1 million in sanctions is ordered. Before the programme started, the SEC could only reward individuals who provided information on insider trading.
This case could be a precedent for employees in the US who fear crossing the "green line". It also underlines the importance of companies revisiting their internal corporate compliance programs to ensure that appropriate and credible measures are in place for a person to report wrongful conduct, without fear of retaliation. Part of the Whistleblowing Program is the prohibition of retaliation by employers against employees who provide the SEC with information about possible securities violations. Having a strong internal reporting system in place may encourage individuals to use internal reporting instruments prior to reporting to the SEC.
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