Overview of Compliance Concerns Raised by Recent US SEC Whistleblower Developments

December 17, 2014

The recent release of the Securities and Exchange Commission’s (SEC) annual report to Congress on the Dodd-Frank Whistleblower Program highlights the growing reliance of U.S. Government authorities on whistleblowers to identify and punish companies that engage in fraudulent behavior. Recent court decisions have provided further clarity on the scope of the whistleblower provisions, including with respect to eligibility for awards and anti-retaliatory measures protecting whistleblowers. These developments demonstrate the need for companies to aggressively take steps to address compliance concerns raised internally by their own employees, or else run the risk that employees may choose to report concerns to the SEC in the hope of obtaining potentially significant monetary rewards and protection from retaliation by their employers. Companies operating in the financial sector should be especially aware of the impact of the growing SEC Whistleblower Program on their activities, given that the most common categories of complaints reported by whistleblowers involved offering fraud and inaccuracies in corporate disclosures and financials.

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