In a guest column for Compliance Week, Phillips & Cohen partner Erika Kelton examines the cases of compliance officers rebuffed by employers and how they stopped violations and navigated the SEC rules to get substantial whistleblower rewards.
Compliance officials are on the front lines in the battle against fraud and corruption, and it can be a lonely fight. When they have specific information about significant wrongdoing by their employer, they may be rebuffed, ignored, sidelined, or even red when they try to do their jobs and stop the violations through internal channels. Like many whistleblowers, however, they often are the type of people who can’t keep quiet when they see something that’s wrong
When the SEC set up the whistleblower program mandated by the Dodd-Frank Act in 2010, the Commission recognized some employers may ignore concerns raised by their compliance departments. For those instances, the SEC created rules—similar to those of the CFTC—that allow compliance personnel and others, such as in-house accountants, to notify the agency of securities law violations and qualify for protection and rewards.
Compliance professionals, like all whistleblowers, must decide whether they want to keep quiet or speak out when they become aware of securities law violations and see corrections aren’t being made. If they want to stop the wrongdoing or have it investigated, the SEC whistleblower program is an avenue they should consider, but the path should be carefully navigated with the help of experienced counsel.
Read the entire article, “Compliance personnel face risks and rewards as SEC whistleblowers,” on Compliance Week’s website (subscription required).