Whistleblower attorney Jason Zuckerman participated in a symposium at Fordham Law titled What Would We Do Without Them: Whistleblowers in the Era of Sarbanes-Oxley and Dodd-Frank. The Fordham Journal of Corporate & Financial Law published a transcript of the symposium, which is available at Symposium, What Would We Do Without Them: Whistleblowers in the Era of Sarbanes-Oxley and Dodd-Frank, 23 FORDHAM J. CORP. & FIN. L. 379 (2018).What Would We Do Without Them- Whistleblowers in the Era of Sarbanes-Oxley and Dodd-Frank
Zuckerman was joined by senior SEC officials and experts in whistleblowing and corporate compliance:
- Jane Norberg Chief of the Office of the Whistleblower, SEC
- Alice BrightSky, Senior Director of Compliance Programs, Fordham Law School
- Tracey McNeil ’99, Ombudsman, SEC
- Jennifer Pacella, Assistant Professor of Law, Zicklin School of Business
- Judith Weinstock, Assistant Director, SEC New York Regional Office
Zuckerman discussed the challenges that whistleblowers face in coming forward, including unbalanced power dynamics, and the success of SEC whistleblower incentives in encouraging insiders with knowledge of fraud to come forward.
At the symposium, Jane Norberg, Chief of the SEC’s Office of the Whistleblower, noted the success of the SEC Whistleblower Program in strengthening the SEC’s enforcement of federal securities laws:
“Whistleblowers provide an invaluable public service, often at great personal and professional sacrifice and peril. I cannot overstate the appreciation that the Office of the Whistleblower staff has and that I personally have for the willingness of whistleblowers to come forward with evidence of possible securities laws violations. Whistleblowers have had a transformative impact on the SEC’s enforcement program, both in terms of the detection of illegal conduct and moving our investigations forward quicker and through the use of fewer resources.”
The symposium addressed a variety of aspects of the SEC Whistleblower Program and the impact of the program on corporate compliance, including:
- The SEC’s efforts to protect whistleblowers, including enforcement of the whistleblower protection provision of the Dodd-Frank Act. For example, the SEC fined a casino gaming company $500,000 for retaliating against a whistleblower who expressed concern that company’s cost accounting model could result in inaccuracies in the company’s financial statements and reported these concerns to management and the Commission. Within weeks of raising the concerns, the whistleblower was slated for termination and removed from significant work assignments.
- The role of whistleblowers in protecting investors, including three whistleblowers whose information halted a scheme through which hundreds of investors had fallen victim. Two of the larger SEC whistleblower awards specifically cited the speed with which the whistleblower tip enabled our staff to move and secure funds for harmed investors.
- How companies should respond to internal whistleblower disclosures. Note that approximately 80% of recipients of SEC whistleblower awards who were employees raised their concerns internally or were aware that their supervisor was aware of the violation before or at the same time that they reported to the SEC.
- The SEC’s enforcement of Rule 21F-17, which bars companies from impeding whistleblowing to the SEC.
- Challenges that whistleblowers face, including blacklisting, and steps that whistleblowers can take to mitigate risks associated with whistleblowing.
- Whether whistleblowers can use company documents to report securities law violations to the SEC.
- The importance of personal liability and personal accountability in rooting out and deterring misconduct.
- How to foster a corporate culture in which employees feel empowered to raise concerns without fear of reprisal.