For the first time, the Securities and Exchange Commission is rewarding a corporate whistleblower whose actual job it is to blow the whistle on a company’s internal missteps.
Today, the SEC announced that it would provide a whistleblower award of more than $300,000 to a company employee who performed audit and compliance functions. The internal auditor had reported corporate wrongdoing to people within the company, including a supervisor. But when the company took no action on the information within 120 days, the whistleblower reported the same information to the SEC.
The information provided by the whistleblower led directly to an SEC enforcement action. “Individuals who perform internal audit, compliance, and legal functions for companies are on the front lines in the battle against fraud and corruption. They often are privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing one,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower. “These individuals may be eligible for an SEC whistleblower award if their companies fail to take appropriate, timely action on information they first reported internally.”
By law, the SEC must keep the identities of whistleblowers confidential and can’t reveal any information that could reveal, either directly or indirectly, the identity of a whistleblower.
The commission’s whistleblower program “rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million,” according to an SEC press release, which noted that awards can range from 10% to 30% of the money collected in a case.
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