The SEC is currently working with whistleblowers who are claiming that Bank of New York Mellon and State Street unlawfully charged customers for currency trades. According to the Wall Street Journal, both banks have denied any wrongdoing but the whistleblowers are trying to cash in on possible bounties from the federal watchdog.
Earlier this week, an SEC report confirmed that this year it received 334 whistleblower complaints in the seven weeks between the months of August 12 and September 30. The most common complaint categories were market manipulation (16.2 per cent), corporate disclosures and financial statements (15.3 per cent), and offering fraud (15.6 per cent).
Since the SEC’s Office of the Whistleblower was launched in August, officials have been dealing with close to 100 tips per day. And this number is expected to double in the coming years.
‘As corporate executives start to see the impact of the new whistleblower rules, they are undoubtedly concerned about the potential risks to their organisations,’ says Gregory Keating, co-chair of the whistleblower and retaliation practice group at Littler, the employment and labour law firm. ‘However, the legal changes and shift in social consciousness are still relatively new. The level of concern is likely to rise in the coming months as companies continue to adapt to the new regulatory environment created by Dodd-Frank.’
According to recent results from Littler’s National Whistleblower Survey, a staggering 96 per cent of senior executives who represent S&P 500 organisations are very concerned about increased whistleblowing activity at their companies; 73 per cent see whistleblowing and retaliation as emerging risk areas.
Companies polled recognise whistleblowing as a complex issue that impacts day-to-day business operations. 40-five per cent of survey respondents report that their companies experienced a whistleblower claim within the last 12-24 months.
A majority of executives, 65 per cent, reveal that their firms are only moderately prepared to handle whistleblower claims and 54 per cent are confident that executives in their organisations understand unlawful retaliation concepts and know not to engage in such wrongdoings. Two thirds (67 per cent) expect whistleblower claims to increase over the next two years.
‘Many companies have strengthened their internal compliance procedures since the Sarbanes-Oxley Act was enacted in 2002,’ says Keating. ‘However, these programs may not be effective under Dodd-Frank. This regulatory shift creates a need for companies to modify their programs to be better prepared for new regulations and increased whistleblower exposure.’
[Article by Aarti Maharaj, Corporate Secretary]