Whistle-blower receives award from SEC

Wisconsin employees may want to know more about an Aug. 29 announcement by the Securities and Exchange Commission that it has made its first whistle-blower award to an employee involved in audit and compliance activities. The award, which was reported to be in excess of $300,000, was for information the employee provided to the SEC on wrongdoings at the employee’s company. According to the announcement, the employee provided the information to the SEC after the company failed to act on the employee’s discoveries.

According to the SEC, the employee correctly handled the matter of reporting the findings to the employee’s company, even reporting them to a supervisor. However, after the company took no action over the next 120 days, the employee contacted the SEC. The information provided by the employee led to SEC enforcement action.

A spokesperson for the SEC said that employees involved in audit, compliance and legal matters are on the front line in a battle against fraud and corruption and sometimes possess detailed knowledge of irregularities that are not readily available to other parties. In some cases, that knowledge can be used to prevent fraud when acted on in a timely manner. When enforcement actions result in sanctions that exceed $1 million, whistle-blowers who provide high-quality, original information are eligible for awards that range from 10 percent to 30 percent of the sanctions that are collected.

Employees who discover fraud or violations of law at their place of employment should report the information to their employer. If the employer fails to take action, it might be possible for the employee to receive a whistle-blower award by reporting the same information to authorities. However, in order to make sure that proper procedures are followed, an employee with such information may want to seek out the advice of an attorney on how to proceed.

Source: ThinkAdvisor, “SEC Gives First Compliance Employee a Whistleblower Award“, August 29, 2014

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