SEC Looking at Other Ways to Communicate with Whistleblowers

According to Sean McKessy, who is in charge of the Securities and Exchange Commission’s Office of the Whistleblower, the agency is exploring the best ways to communicate with whistleblowers and their lawyers. McKessy spoke as part of a—sponsored webcast panel on whistleblower issues.

Right now, the office is adhering to the communications policies of the SEC’s enforcement division. However, McKessy said that the Whistleblower Office is in the process of coming up with “communicating best practices,” documenting interactions, and developing internal policies and procedures. Proper documentation would hopefully ensure that the necessary information, and the extent that the whistleblower cooperated, are properly recorded so that this information can be presented in the event there is a claim.

The SEC’s whistleblower office is also working on its yearly report to Congress about the progress the program has made, as well as its the investor protection fund that provides whistleblowers who come forward with their financial reward with compensation.

David Becker, who is a former SEC general counsel and was also a co-panelist, spoke about companies considering whether to self-report internal problems. Becker noted that there is greater incentive to self-report when there is a possibility that an employee might go to the SEC first. However, he pointed out that companies considering self-reporting would have to take into consideration how revealing specific information could impact them, as there is certain information that he SEC “will not be able to walk away from.”

Meantime, many companies are now using certification forms. These request employees to notify a company about unethical or unlawful behavior that they observe. McKessey, however, cautioned that unless the forms are properly worded and constructed, they might affect the employee’s ability to come forward to the SEC. That said, he did push for companies to move towards developing systems that allow for the reporting of wrongdoing. As long as an employee fears reprisal and punishments for stepping forward there is a greater likelihood that they won’t say anything.

The whistleblower bounty program is supposed to provide employees that come forward with certain protections. However, a worker can still be fired for company policy violations and poor performance as long an employer provides proper documents showing that the termination would have happened regardless of whether or not the employee was a whistleblower.

Whistleblower Complaints
A whistleblower that steps forward to voluntarily report possible violations of federal securities laws may be entitled to part of the damages collected by the government from the responsible parties. That percentage of the award is 10-30%.

To receive this money, the information provided by the whistleblower must be original and has to result in a successful SEC action ending in an order of monetary sanctions above $1 million.

Stockbroker Fraud
Our securities fraud lawyers are here to help our investor clients recoup their losses.

SEC Whistleblower Office Considering Ways To Communicate With Informants, Chief Says, BNA Securities Law Daily, September 14, 2011

Office of the Whistleblower, SEC

Whistleblower Lawsuit Claims Taxpayers Were Defrauded When Federal Government Bailed Out Houston-Based American International Group in 2008, Stockbroker Fraud Blog, May 5, 2011

SEC is Finalizing Its Whistleblower Rules, Says Chairman Schapiro, April 28, 2011

Whistleblower Claims SEC is Illegally Destroying Records of Closed Enforcement Cases, Institutional Investor Securities Blog, August 31, 2011

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