Bloomberg News reports that the US Securities and Exchange Commission will let corporate whistleblowers collect as much as 30% of penalties when they report financial wrongdoing, even when they bypass companies’ internal complaint systems.
Nightmare for management!
The SEC rejected requirements that whistleblowers make reports through companies’ internal compliance programs before going to the agency.
So much for fiduciary duty to one’s employer.
So much for all those internal systems mandated by Sarbanes-OxleyAct.
If you had a clue that something was amiss, would you report it to your company’s system, and perhaps make yourself vulnerable to become a target of vindictive or retaliatory management?
Or would you take your tip to the
Lottery/Jackpot -uhh-SEC for a possible windfall payout of 30% of penalty monies?
(Insert Final Jeopardy theme music here)
Managements will find themselves becalmed and clueless as internal reporting systems are ignored by employees in anticipation of
Lottery/ Jackpot, share of payout of penalty dollars assessed by going straight to the SEC.
Welcome to the Orwellian world of “rewarding individuals who provide the agency with high quality tips that lead to successful enforcement actions.”
And say “Goodbye” to any hope of creating any sort of functioning internal compliance /reporting culture.
Sorry management. There’s no way you can compete with a jackpot lottery reward for whistleblowing.
Note to congress- Now might be a good time to tidy up that Sarbanes Oxley Act now that the SEC has established the 2011 Whistleblower Lottery.