An article in Law 360 titled Big Awards Pushing Compliance Pros To Be Whistleblowers discusses the impact of the SEC’s award of approximately $1.5M to a compliance officer. The article reports that both defense counsel and whistleblower counsel have seen an uptick in whistleblower complaints brought by internal audit and compliance personnel.
In the article, Zuckerman notes that this substantial award to a compliance officer and prior SEC whistleblower awards to internal audit and accounting personnel show that compliance programs in some companies are ineffective. According to the SEC’s press release, the “compliance officer reported misconduct after responsible management at the entity became aware of potentially impending harm to investors and failed to take steps to prevent it.” Similarly, a July 2014 SEC press release announcing a $400,000 award notes that the whistleblower did “everything feasible to correct the issue internally” before turning to the SEC.
As we approach the five-year anniversary of the Dodd-Frank Act, the evidence grows stronger everyday that the SEC’s whistleblower award program is extraordinarily effective in protecting investors and strengthening enforcement of federal securities laws.