The benefits of whistleblowing

Employees in Wisconsin may have heard that on March 2, the Securities and Exchange Commission announced that it would be issuing the first whistle-blower payout to a former company officer. The individual received a payout that ranges from $475,000 to $575,000 for becoming a whistle-blower. This particular case also involved an exception to the standard rules that define whistle-blower laws.

The award was given because the whistle-blower reported high quality information about securities fraud that led to the SEC executing an enforcement action that included penalties worth over $1 million. Generally, partners, trustees, directors or officers who become aware of violations from another worker are not eligible for any awards bestowed by the whistle-blower program. However, the law provides an exception for the rule when the subject is reporting the violation 120 days after compliance personnel with the information have failed to address the issue appropriately.

The director of Division of Enforcement at the SEC said that the corporate officer was being recognized for reporting the violation of securities law once it became apparent the employer’s internal compliance system would fail to do so. He also said that cooperation from company insiders is paramount to the SEC’s ability to detect and penalize securities fraud. The director also emphasized the urgency corporations internal compliance departments need to have when employees or upper management report securities law violations.

Employees who need more information about whistle-blower protection laws might benefit from consulting a lawyer. Legal counsel may be prepared to investigate the allegations and help determine whether or not the employer truly is in violation of the law. Lawyers may be able to help protect victimized employees from retaliation, while working to recover restitution for any ensuing damages.

Source: Think Advisor, “SEC Gives First Whistleblower Award to Former Company Officer,” Melanie Waddell, March 2, 2015

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