29 April 2015

Companies warned to heed compliance whistleblowers

A compliance whistleblower has been awarded over a million dollars, the second time an employee in an internal audit/compliance function has received an award outside the normal whistleblowing rules.

Songquan Deng

Companies have been warned to set up prompt response systems to respond to concerns from compliance employees following a major payout to a compliance whistleblower last week. The Securities and Exchange Commission (SEC) awarded $1.4 million to $1.6 million to a compliance officer under the SEC's whistleblower programme as part of an enforcement action against the whistleblower's employer.

Impending harm

A company normally has 120 days to carry out an investigation into reported concerns by those in a compliance function. However, the latest award to a compliance officer fell under the impending harm exception. Andrew Ceresney, Director of the Division of Enforcement, stated, 'This 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.'  Under this exception, there was no requirement to wait 120 days to report to the SEC and qualify for an award. Source: Mondaq

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