The Securities & Exchange Commission’s new whistleblower program website is now live.
It explains how employees can file tips about corporate wrongdoing that can earn them the right to reap millions of dollars.
The website, (www.sec.gov/whistleblower), which went into effect on Friday, is part of the new Office of the Whistleblower, an outgrowth of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Office of the Whistleblower will collect information about security laws violations.
Under Dodd-Frank, if an employee provides ‘new and timely information’ about any fraudulent activities, that person is eligible for a financial reward. The whistleblower program pays awards between 10 per cent and 30 per cent of any fraud recovery or monetary sanctions of over $1 million. All tips must be high quality and lead to successful enforcement.
The new website includes information on eligibility requirements, directions on how to submit a tip or complaint, instructions on how to apply for an award, and answers to frequently asked questions.
As Corporate Secretary previously reported, experts disagree on the merits of the whistleblower provisions of Dodd-Frank, primarily because bounties could be quite hefty given enforcement settlements of the recent past. On July 15, 2010, for instance, the SEC announced that Goldman Sachs would pay a record $550 million for misleading investors about a subprime mortgage collateralized debt obligation that the firm marketed.
Industry observers further believe that the SEC will take this program seriously, given the public black eye it suffered over its mishandling of several recent scams and frauds. Harry Markopoulos, an independent fraud investigator, approached the SEC many times over several years to express concern about Bernie Madoff, but nothing was done.
‘The SEC cannot afford another Madoff,’ says David Childers, chief executive officer of Portland, Oregon-based EthicsPoint.
Moreover, the commission says the new whistleblower website will post a list of roughly 170 enforcement actions the agency has taken in the past year. The SEC says that any whistleblowers involved in those cases should also file official paperwork claiming their rewards.
[Article by Aarti Maharaj, Corporate Secretary]