SEC Whistleblower Program – Early Results Point to Huge Potential Impact

Jordan Thomas -

Even though it only became effective in August, the Securities and Exchange Commission’s (SEC) new whistleblower program is already having a powerful impact, according to the Annual Report on the Whistleblower Program released by the SEC this month. According to the report, the SEC received 334 whistleblower tips in the seven weeks since the program became effective on August 12, 2011, to September 30, 2011, the end of the fiscal year. Tips came from individuals in 37 states, as well as from several foreign countries, including China and the United Kingdom, demonstrating the global reach of this innovative new program. It is too early to identify and specific trends or provide amounts of monetary awards paid to whistleblowers. But considering the significant monetary awards and anti-retaliation protections offered, and based on the early numbers, it is clear that the whistleblower program will be a powerful new tool in investigating and prosecuting violations of the securities laws.

Establishing and Maintaining an Ethical Corporate Culture

Jordan Thomas -

In-house corporate compliance programs have recently undergone a positive transformation, including the growth of strong and independent compliance functions. But as I argue in a recent New York Law Journal article, to remain successful and scandal-free in this era of corporate wrongdoing, organizations must be more forward-looking and establish a culture of integrity that deters misconduct from occurring in the first place. Indeed, most of the organizations that were the subject of major scandals over the last decade had well-funded compliance programs, yet the fraud went on. Now with the establishment of the Securities and Exchange Commission’s (SEC) new whistleblower program, enacted as part of Dodd-Frank, the need for such a strong ethical platform has never been more critical. In this new program, the federal government has essentially deputized virtually every company employee to serve as their foot soldiers in the fight against fraud and corruption. Legal and compliance officers have new and compelling arguments for increased resources and support in establishing strong ethical cultures and state-of-the-art compliance programs.