The U.S. Securities and Exchange Commission, trying to encourage employees to report corporate wrong-doing, opened a website today to gather tips as its new bounty program for whistleblowers officially begins.
The Dodd-Frank Act’s new incentive program, which rewards tipsters with as much as 30 percent of penalties collected, has been operating on an interim basis since the law was enacted last year.
Sean McKessy, chief of the SEC’s whistleblower office, said in an interview that tip quality — if not volume — has already improved since last year’s enactment. Some recent tips will be eligible for the bounties, he said.
The SEC’s Office of Market Intelligence will do most of the “wheat versus chaff work” to filter incoming tips, McKessy said, noting that the SEC whistleblower office has just seven staffers. “We just don’t have the resources to read every single one of them.”
Today’s formal opening means whistleblowers will now have to submit tips in the agency’s approved formats, such as a questionnaire accessed through the website.
Companies have told the SEC they’re concerned that the program will cause whistleblowers to ignore firms’ internal compliance programs.
McKessy said employees who first report a securities law violation to their companies will get the same reward consideration as if they reported it to the SEC. They also “receive the benefit of all the information uncovered by the company in connection with its own internal investigation of the alleged wrongdoing,” he said.
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